The dollar weakened against the euro yesterday as investors weighed prospects for a US economic recovery in light of the US government’s plan this week to cleanse banks of bad assets. The dollar was also undermined when US Treasury Secretary, Timothy Geithner, shocked the markets by saying Washington was open to the idea of a new global reserve currency run by the International Monetary Fund to replace the dollar. However, the dollar regained some support when Geithner later qualified his remarks by reaffirming the dollar's role in the world financial system, and President Obama stated that the dollar remained a strong currency.
The euro gained ground despite grim data out in the eurozone, including news from Germany that business confidence fell to its lowest level ever in March. However, some analysts expect the euro to weaken next week as many predict the ECB will announce a further interest cut, and some expect the central bank to discuss quantitative easing measures at their next meeting as well.
There are several significant announcements taking place in the US today including Gross Domestic Product and Jobless Claims.
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