Euro Sinks Against Dollar
I was at a family gathering over the weekend and I picked up a newspaper they had laying around (something I rarely do these days). I happened to pick up the Business section of the Sac Bee and after perusing for 10 minutes or so I started reading the little column of tid-bits of information they want to report without writing an actual story. That’s where I found this:
The euro fell to it’s lowest level this year against the dollar on Friday as France reported tepid economic growth while the Federal reserve Chairman Alan Greenspan offered an upbeat assessment of the U.S. economy.
The euro, used by 12 EU nations, was trading at $1.2558 in late New York trading, down from $1.2639 late Thursday.
Greenspan said the U.S. economy, which appeared to hit a soft patch in recent months on surging energy prices, would weather the situation well.
-Associated Press
I don’t have a link to cite, I’m just typing it off the page as it read from the Sacramento Bee. And that’s it, that’s their entire story.
Remember a few months back all the horrific news we were getting about how bad the U.S. economy must be because the dollar was falling so fast against the euro? I called it BS at the time and I stand by my assertion. Now that the dollar is climbing back against the euro you don’t hear hardly a word. I haven’t heard about this exchange rate in months, ever since the dollar hit it’s “record low”.
Anyway, there is this link I have to Bloomberg:
Bloomberg – It now seems that the euro’s strength of the past three years is coming to an end, much to the relief of European exporters.
Predictions of the euro reaching $1.40 anytime soon can be tucked into the filing cabinet under the desk. Instead, the currency shared by 12 European Union nations is heading back toward parity with the dollar.
“The rise of the U.S. dollar against the euro will continue this year and beyond,” said Dirk Chlench, an economist at Hypothekenbank in Essen AG, in an e-mailed response to questions. He pointed to the recent drop in overseas purchases of U.S. assets as illustrative of the changed mood. “A few weeks ago, such economic news might have triggered a U.S. dollar sell-off.”
It may be only a blip. Still, since mid-March the currency has slumped from $1.34 to its current level of $1.25.
“I suspect that we are now witnessing the beginning of a bearish trend for the euro,” wrote Joachim Fels, chief global fixed-income economist at Morgan Stanley in London, in a note to investors last week. “To put a number on my view, I think parity for EUR/USD could be broken within the next 18 months.”
There are certainly plenty of reasons to sell the euro.
Growth in the euro area remains weak, and Italy has just slipped back into its second recession in two years.
The watering down of the stability pact, which limits budget deficits to 3 percent of gross domestic product, will lead to more widespread government borrowing across the region.
I don’t think this is so much a case of “liberal blame-America-first media bias” as much as it is the simple fact that bad news sells and good news doesn’t.
Though it wouldn’t hurt the ego of the average American to report that our economy is rock solid compared to many around the globe…
