Dollar hits 1-year low vs Euro

Dollar hits 1-year low vs Euro
By Darryl Thomson
Published: June 5 2006 11:51 | Last updated: June 5 2006 11:51

The dollar fell to a one year low against the euro on Monday after unexpectedly soft US employment data at the end of last week scaled back expectations for the depth of Federal Reserve monetary tightening.

This contrasted with strong eurozone data last week, which fuelled expectations the European Central Bank may even raised rates by 50 basis points this Thursday, though the vast majority of economists predict a quarter point rise to 2.75 per cent.

Volatility levels could be raised with holidays in a number of countries in Europe.

US non-farm payrolls rose by 100,000 less than forecast, climbing just 75,000 in May. Along with downward revisions to previous months this pushed the Fed funds futures to suggest a 46 per cent chance of a quarter point Fed rate increase in June. Before the data the chances had been 68 per cent.

The dollar slid 0.2 per cent to $1.2962 against the single currency, having fallen to $1.2979 at one point. It dropped 0.3 per cent against the yen to Y111.74, but against sterling the greenback held steady at $1.885.

The euro climbed 0.3 per cent against the pound to £0.6876 and 0.5 per cent versus the yen to Y114.85.

This afternoon sees the US Institute of Supply Management’s service sector survey, due at 1400 GMT. The index is expected to indicate moderating growth, with the headline number slipping to 60.0 in May from 63.0 in the previous month.

Some pointers on the path of the big three’s interest rates could be derived from the International Monetary Conference in Washington, where Fed Chairman Ben Bernanke, ECB President Jean-Claude Trichet and Bank of Japan Deputy Governor Toshiro Muto all participate in a panel discussion at 1815 GMT.

Asian currencies benefited from the dollar’s doldrums. The South Korean won added 0.6 per cent to Won942.5 and the Singapore dollar rose 0.5 per cent to S$1.5720.

China announced on Monday a primary dealer system for currency trade, further reforming its foreign exchange market, but traders said the new system is unlikely to lead to a faster appreciation of the renminbi, which stood at Rmb8.0082, up 0.2 per cent from Friday, its biggest one-day rise since revaluation last July.

Europe is dead.

The Pacific Rim is where all the action is!

PErhaps is because everyone mesures via the USD. The fact is that most countries are going 'yay we rock, look we are getting better via the USD!' In fact, isn't it because the USD is getting PWNed by the US gov? I mean... if the standard goes down... then the other way to see it, everything else goes up?

Ugh. Going to make travel to Europe a lot more inconvenient. And that's already not counting the extra expenes for a bunch of new Canadian t-shirts and apparel, as well as French language lessons

A lot of the Asian Tiger economies have also been hinting that they were going to start converting their Dollar reserves into Euros. Those kinds of annoucement have been noted for weakening the US$ quite heavily against the Euro.

Ugh. I think this would also make things just plain catastrofic if, say, China decided to switch to Euros as the currency they accept, instead of USD, and decided to ask US to pay back all, or even a large part, of the US debt in Euros. USA wouldn't be able to just print more USD to make that problem go away.

You and the Bank division should start a comedy act - oops you did already.
( Gonna knick you two "Dome And Glome" )


Dead - Jamie we been around a lot longer than you lot state side and as far as I can tell we are sticking around.

So whats the next happy little headline boys ?

Yup, its become a very powerful bargaining chip on the negotiators table for Trade talks. A lot of US$ are stashed away in countries dollar reserves. A lot more then what is actually circulating in the US itself. If these dollars were "repatriated" it could be bit of an issue.

Hence why when a country hints at converting their reserves away from the US$ it causes moments of panic on the market. A recent suggestion of having a new Oil market that sells in Euro has also caused bit of a stir.

I meant dead as in stagnant. Not actually dead.

I can finally cash in all those Euro burning a hole in my wallet.

Yes. There is a growing movement in many countries to convert their holding from USD into Euros. Also, I think there is movement in oil exporting countries to start pegging oil sales in Euros, instead of USD as well.

If many of those countries who have been supporting the US Dollar with loans, were to pull out now....the United States would certainly be in quite a mess. In the long run it would be worth it though. The people in the US are all living off of credit cards and in debt for thier own house and family, it is not a real wonder that their government is also in massive debt. Too MUCH consumption, not enough production.

But, hey....just give me another loan....I need another new car !! I mean...I am an American....I am supposed to have a new car every three years. Oh, maybe I should take out a third mortgage on my house....

Totally agree. The US needs to get its financial house in order.

Then we can worry about taking over the world.

A BIT of a stir? That was theoretically the proverbial straw that broke the cammels back in regards to changing USA's policy with Iraq from strained diplomacy to "he's got WMD's" war. Sadam threatened to sell his oil for Euro just before US decided he was a major threat. It's no doubt very much related (although I'm sure not the only reason we went to war).

Iran is next.

That is ONLY because Fords break every three years.

Sorry British understatement there But yes Iran's mentioned the same thing about going Euro. Whether thats resulted in the recent US overtures for dialogue remains to be seen or whether we are heading down the slippery slope, with Iran mentioning cutting back oil supplies.

All of this just goes to prove once again how skepticism affects the value of the dollar. If people have been keeping track, there was such an economic affect on SL with skepticism in the forums that devalued the L$. The only difference between the SL economy devaluing due to this, and the US$ devaluing in RL do to this, is that it is a little more regulated in RL on the amount of skepticism that decreases the value.
See, if only people would be more positive about things, the values would stabelize. Unfortunately, we have people who rock the forums daily with "THE SKY IS FALLING!" posts. Thankfully, we have seen the value of the L$ increase in value over the weekend, and it looks like its still gaining ground. Things like this happen when people stop saying the sky is falling, and stick a sock in thier mouth to watch how things go on thier own.
There is a lot to learn about the parallel economies concerning RL and SL. I do believe that SL is one giant experiment where we are all paying rats being observed in a virtual economy. Wanna see what happens when skepticism is introduced into a RL economy? Just make a simple forum post "LL is planning on selling L$ on the Lindex..." and see what the economy does. Same thing would happen in RL if the US all of a sudden said "We are going to print more money than we can back..." Panic in the streets, instant devaluation of the US$ as people switch to alternate currencies, and wild dogs raping elderly women in the streets!
Sitting back as I do, and watching how the SL economy reacts to the forum, and then putting it into RL perspective, it all makes sense. Maybe more people should take a step back and look at how similar RL and SL really are.

I reckon it's because the US doesn't have enough money sinks.

When the big dawgs like China and Japan start converting Dollars to
Euros, the US Greenback is F*#$%ed...

The one bright side is that America will be full of highly skilled workers
for pennies on the Euro. Making US Goods more competitive against
expensive Asian/Europeans Goods. More jobs for us, more unemployment
for the Euro Trash...

Its probably already started I know people who have gone over to the US just to do shopping on clothing and electronics. Its becoming bit of problem for the Inland Revenue, so these days the Custom and Excise lot at airports are a lot more strict with regards to duty on imports.

This thread is about the internal ecomony of SL how?
Should be moved to the sandbox surely

If the dollar keeps declining, eventually the Lindex $L to $USD rate will stabilize.
There. Now it's SL economy related

"If the dollar keeps declining, eventually the Lindex $L to $USD rate will stabilize."

Well, that's one way to get to L$1/$1.

Musuko.

If the USD becomes US$1/L$1, I'll crap my pants....
I'd moved to England and get a job paying Pounds Sterlings
so I can be rich..


£1 British pound = $1.8714 U.S. dollars

And there was me thinking that it was posted here for its troll potential. Its so obvious once you make it clear like that