Daily Insight
Today is Tuesday, January 6, 2009
The euro fell to a three-week low against the dollar on speculation slowing inflation will prompt the European Central Bank to cut interest rates more than forecast. Investors are betting the ECB will cut its key rate by at least 25 basis points next week. The ECB has cut interest rates by 1.75 percentage points since early October to 2.5 percent as the region has entered a recession.
The pound rose against the euro for a second day on speculation interest-rate cuts will revive the economy faster than in the common-currency region. The pound also gained versus the yen and the Swiss franc. The pound slid 23 percent against the European currency last year, its biggest decline since the euro came into existence.
Canada's currency touched the highest level in more than a week, reversing an earlier loss, after commodities including crude oil advanced. In 2008, the Canadian dollar fell 18 percent against the U.S. dollar, the biggest annual decline since at least 1972. The global recession cut demand for commodities, which account for about half of Canada's export revenue.
One-third of the world's wealth has been wiped out by the financial crisis and this will have a lasting effect on global consumption, wrote London-based Stephen Jen, chief strategist for emerging markets in the bank's sales and trading arm. Emerging-market currencies are poised for further losses as recessions force wealthier nations to rein in overseas investment. Twenty-two of the 26 emerging-market currencies tumbled versus the dollar in 2008 as $1 trillion of credit-market losses, the bankruptcy of Lehman Brothers Holdings Inc. and recessions in the U.S., Europe and Japan curbed investors' risk appetite.
Have a great week!
MARKET INDICATORS
DJIA:9065.78
NASDAQ: 1650.84
Gold: $847.70
Crude: $50.30