The euro is taking advantage of the bad U.S. data
February 28th, 2010
The dollar has gone the last week in a constant debacle against major world currencies. The unexpected increase (in magnitude) of unemployment and a higher trade deficit was mainly responsible for the flight of money from dollars to euros. The single currency enjoyed a bullish rally that led her to break the benchmark of $ 1.33. And the trend was upward at the close of the markets.
Investors have withdrawn trust the dollar, the currency of a country suffering a recession than expected, with major setbacks, they do presage a greater evil: high unemployment, problems in the corporate and macroeconomic bad numbers.
And the worst news came on the side of the huge increase in
the deficit. Even the Fed, which by law can not issue debt, is considering, in fact, is negotiating with Congress-the increase in their power to obtain resources to enable it that way. The triggering event is that the Department of Treasury-only can issue public debt has closed American-tap the Federal Reserve, following its own limitations as to the legal limits debt issuance.
Put another way: the U.S. is in debt limits. They say that this crisis will pay the next 4 generations of Americans. And I do not doubt it.
Tags: issue debt, the currency, the dollar, to euros.