Dollar Plunges to Record Low Against Euro
finance.myway.com
[i am still buying silver bullion and am likely to continue doing so until about the time that POS breaches 10 bux... these budget deficits are not going away = currency debasement]
The dollar dropped to record lows against the euro on Friday, succumbing to negative sentiment and erasing all of the U.S. currency's earlier gains following a robust U.S. October employment report.
Technically driven trading also played a role in the dollar's fall.
The euro surged above $1.2900 and then breached the prior record high around $1.2927 hit in February, reaching new record peaks around $1.2950, according to Reuters data.
The dollar index, a measure of the U.S. dollar's performance against a basket of currencies (DXY), fell to a nine-year low. The U.S. currency also fell to six-month lows against the yen and 6-1/2 month lows against the Australian dollar.
Traders were struck by the dollar's inability to sustain a robust rally fueled by the strong U.S. economic data. An undertow of negative dollar sentiment driven by the U.S. current account and budget deficits made currency investors keen to buy euros, analysts said.
"The price action today is nothing short of stunning," said Richard Franulovich, senior currency strategist with Westpac Banking Corp in New York.
"Net-net, given the sharp U.S. upward revisions to payrolls, for the euro to punch higher to fresh highs is nothing short of spectacular. I think this is a pretty good guide at just how entrenched negative sentiment is toward the dollar," he said.
Late morning in New York, the euro was trading at $1.2935, up about 0.5 percent on the session.
Against the yen the dollar was trading at six-month lows around 105.54 yen, down about 0.4 percent.
Against the Swiss franc , the dollar was trading at eight-year lows around 1.1806 francs, down about 0.5 percent.
In its broad-based fall, the dollar also weakened to a fresh 3-1/2 month low against the British pound.
Sterling was up about 0.5 percent at $1.8531.
"We've seen a shift from cyclical to structural issues such as the twin deficits" that are hurting the dollar, said Shaun Osborne, chief currency strategist with Scotia Capital in Toronto.
"Although it was a pretty good payrolls report ... I'm not too surprised that we had a sell-off. I think people are looking for levels to get short dollars again, and they used the initial reaction to the jobs numbers to load up again" (with other currencies), Osborne said.
"It looks like we are on the cusp of another pretty decent move lower (for the dollar) over the course of the next few weeks," he said.
Earlier on Friday, the dollar had rallied after the U.S. jobs report appeared to dispel some doubts about the power of the U.S. economic recovery.
The report appeared to make a Federal Reserve rate hike in December, which had been questioned recently, once again quite likely.
The report showed the number of new U.S. jobs increased at the sharpest rate in seven months, with a gain of 337,000 non-farm payrolls jobs in October. The number easily exceeded economists' forecasts of a rise of 169,000. However, the jobless rate edged up to 5.5 percent, above the 5.4 percent forecast.
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