Dollar Falls to Lifetime Low Compared to Euro
Inflation is clearly upon us, gold is skyrocketing in value and the Euro has become more expensive than ever. Those with home loans and home equity line of credit loans have cause to rejoice as their loans become easier to pay off. Those without homes may find themselves struggling to pay rent as things become more expensive and jobs fail to keep pace by adjusting wages upwards.
Reuters is reporting:
The dollar hit a record low against the euro for the third straight session on Monday amid fears that a deepening housing slump could rein in economic growth and trigger more cuts in U.S. interest rates.
Trade was light as attention shifted to existing-home sales and consumer confidence data due on Tuesday.
Investors are worried that weak economic reports will push the Federal Reserve to follow last week’s half-percentage-point rate cut with more policy easing, further eroding the dollar’s yield advantage over other currencies, particularly the euro.
After last week’s cut, U.S. benchmark interest rates stand at 4.75 percent, compared with 4 percent in the euro zone.
With a Euro now costing $1.40, there are concerns that the dollar could fall even further in relative value to the European currency. A high exchange rate encourages European imports of American goods, but makes it prohibitively expensive for Americans to travel and purchase European.
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