fate of the US dollar depends on the weather

Foreign Exchange Currency Outlook : The idea that the ECB will cut rates near year-end or in Q1 got a dose of cold water today with comments by Weber and Bonello. (Told you so.) If inflation in the eurozone really is 4% in August, as Bonello suggests, the US dollar is at great risk of taking a tumble off its newly acquired throne. The other major threat to the dollar is oil, and we can’t get a good read on that until we know whether Hurricane Gustav will hit oil facilities, both production and refining, in the Gulf (which supplies over 25% of US refinery needs). If you remember Katrina, the US dollar crashed by a huge amount immediately upon landfall and kept going down for weeks. It’s awful to think that the fate of the US dollar depends on the weather, but there it is.

We are feeling a little gloomy going into today’s US currency trading session.

These are big winds against the dollar.

But keep the faith—the economic material is actually quite good,

whatever the sky-is-falling crowd may say.

Bye for Now

Barbara Rockefeller

Best Exchange Rates - Contact IMS Foreign Exchange