Say good bye to the greenback.
From Bloomberg by Ye Xie and Kim-Mai Cutler entitled: Dollar Falls to Record Against Euro on Fed Rate-Cut Speculation
“The dollar fell below $1.51 per euro for the first time after Federal Reserve Chairman Ben S. Bernanke signaled he’s ready to lower interest rates again to support the weakening U.S. economy.
An index that tracks the currency against six major counterparts dropped to the lowest since the g”The dollar fell below $1.51 per euro for the first time after Federal Reserve Chairman auge started in 1973, as European Central Bank policy maker Axel Weber said investors expecting rate cuts in the region are underestimating inflation. The U.S. currency fell to an all-time low against the Swiss franc and to 23-year lows versus the Australian and New Zealand dollars.
“This is a new chapter for the dollar,” said Russell LaScala, head of foreign-exchange trading in North America at Deutsche Bank AG in New York. “You are seeing divergence of central banks’ views.”
The dollar weakened past $1.51 per euro today after Bernanke said the Fed “will act in a timely manner” to insure against “downside risks” to the economy. His remarks came in testimony to the House Financial Services Committee in Washington. The Fed watches the dollar “very carefully,” and has no “target” for it, he also said.
Futures on the Chicago Board of Trade show a majority of traders expect the Fed to cut rates to at least 2 percent by mid-year, from 3 percent now. The bank has slashed rates from 5.25 percent in September, and is scheduled to meet next on March 18.
“The dollar is undermined by lower U.S. yields,” said Daniel Katzive, a senior currency strategist at Credit Suisse Group in New York. “I don’t think there’s much scope for that to change; the dollar will remain weak.”
Here’s the chart of the dollar’s most recent decline:
Now that’s ugly. Thanks Ben.