The Canadian dollar plunged over 1.5% as the equity market imploded, commodities plunged, and the Euro dropped by 3% after ECB President Trichet admitted that they had considered cutting interest rates to address a slowing economic environment.
US employment fell more than market consensus posting the loss of 159k jobs, the largest decline since March 2003, while the unemployment rate surprisingly held steady at 6.1%. Fundamentals however remain a side show as the primary drivers of the US dollar continue to be investor liquidation of deteriorating positions, tighter credit conditions, and the ongoing need to repatriate funds back to the US to address funding restrictions.
There is talk out there of a coordinated effort across the G7 to cut interest rates in an attempt to provide support to ailing markets globally. It's unknown at this time whether such a move would be of any benefit as cash remains king and banks would rather hold than lend, but I guess at this point what do the various central banks really have to lose? For now, the US dollar remains well supported.
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