Euro Slides against the Dollar and the Yen
Posted on 21. Nov, 2008 by admin in Daily Euro Analysis, Euro Currency, Euro Currency News
Despite aggressive steps taken by governments around Europe, such as Interest Rate reductions and stimulus spending plans, reports show that the Euro-Zone is headed towards deep recession. The EUR slipped 0.5% against the Dollar to $1.2458. The European economy continued to contract through 2008, leading to economists foreseeing no growth probably until the 3rd quarter of 2009. With inflation falling sharply, the European Central Bank has all the justification it needs for a further Interest Rate cut from the current level of 3.25%. Analysts foresee additional 50 basis point cut in December.
The British currency set new record lows vs. the EUR this week; in response to the Office for National Statistics’ announcement that sales slid 0.1% last month. The Bank of England signaled yesterday that it’s prepared to cut Interest Rates further, after reducing the target rate 1.5% to the lowest level since 1955. The Pound fell to $1.4771 as of 5:13 p.m. in London, from $1.4952 yesterday.
The economic outlook remains negative for both the EUR and the GPY. As the Euro-Zone currencies continue to descend versus a number of other global currencies, such as the Dollar and Yen, it raises the likelihood that policy makers will cut borrowing costs further, in order to revive the faltering European economy. In the meantime, it appears that the Dollar is a preferable investment versus the EUR.
Stacey Derbinshire
22. Nov, 2008
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