Dollar Declines
Source: http://feedproxy.google.com/~r/ContrarianProfits/~3/HxutiNEQZn8/18471Posted on Monday, June 29th, 2009 | In Market Commentary
In the currency market, the dollar lost some more ground to the euro. Late Friday, the euro was trading at $1.4068 vs. $1.3991 on Thursday.
China took center stage as Marketwatch.com reported that “the People’s Bank of China’s annual financial stability report repeated an earlier call by central bank chief Zhou Xiaochuan for the development of a new super-sovereign currency that would largely take the place of the dollar…
“The Chinese central bank’s comments come after Chinese government officials had played down concerns over the dollar’s reserve-currency role following a visit to China by U.S. Treasury Secretary Timothy Geithner earlier this month.
“ ‘There may be signs here of tensions mounting between the PBOC’s economic concerns over China’s holdings of dollars and the Chinese government’s diplomatic reasons’ for toning down their criticism, said Stephen Gallo, head of market analysis at Schneider Foreign Exchange.
“The central bank is ‘still clearly worried about the longer-term opportunity cost of holding dollars — in as much as it can cite the dollar’s role in the global economy as one of the main reasons for the financial crisis — while the Chinese government is still more happy to play to the tune of the Bernanke-Geithner camp which sees leaning against the wind in order to protect the U.S. dollar as a necessary evil,’ he said.”
The day’s hard number was from the Commerce Department, which said U.S. personal incomes jumped 1.4% in May due to the one-time stimulus checks, leading the savings rate to jump to a 15-year high.
But all Sal Guatieri, an economist for BMO Capital Markets, had to say to that was: “Personal tax cuts and government income support have brought consumers back from the dead, but the recuperation period promises to be a lengthy one.”
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