Will growing unemployment bring Fed monetary stimulus and inflation at the expense of the dollar?
*Financial Times, by Sarah O’Connor, June 6, 2008:
"Dollar falls after jump in US unemployment
The dollar fell on Friday afternoon after data showed unemployment rose
sharply last month in the Unites States to its highest level since 2004.
Although data showed fewer people had lost their jobs last month than
expected - 49,000 against the consensus forecast of 58,000 - the
unemployment rate jumped to 5.5 per cent.
'The overall trend is clearly weakening with the unemployment rate
having increased by a full percentage point over the past twelve
months,' said James Knightley at ING. 'This is bad news for the
household sector which is already having to cope with negative real
wage growth, falling house prices and more expensive borrowing.'
The dollar fell almost 1 per cent against a basket of currencies and
0.5 per cent against the euro to $1.5667.
The euro was boltstered by Thursday’s news the European Central Bank
might raise interest rates.
Central bank governor Jean-Claude Trichet surprised the market by
saying inflationary pressures could push the bank to raise interest
rates as soon as next month, sparking a sharp strengthening in the
single currency. On Friday the euro reached a 5-month high against the
yen of Y165.94 and rose 0.1 per cent to £0.7990 against sterling"
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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