Herald Tribune: Euro rising, dollar falling

[villager]

Euro's rise is linked to good news this time

By Carter Dougherty International Herald Tribune

TUESDAY, MAY 9, 2006

FRANKFURT After a roller-coaster year, the euro appears to be headed firmly on an upward track as Europe's once-sputtering economy starts firing on all cylinders and the U.S. dollar weakens against major currencies.

A mixture of brisk exports and accelerating economic growth is persuading investors to take shelter in the euro as the dollar continues a relentless downward trajectory. The dollar's decline - which affects Asian currencies as well - has accelerated since the end of March as the huge U.S. current account deficit widens further, and the Federal Reserve signals that it may pause its 2- year long cycle of raising interest rates.

But while the euro has seen its rising fortunes fade in the past, things look different this time. Analysts say its fate is not tied solely to the dollar's whims. Rather, its renewed strength stems from a generally upbeat mood in Europe - one that is in stark contrast to even a year ago, when the collapse of the European constitution underscored deep uncertainty about the future of the Continent. "Now, things are really happening in the European economy," said Erik Nielsen, chief Europe economist for Goldman Sachs.

On Monday, the euro hit $1.2787 before slipping to 1.2703, still up sharply from $1.22 in early April. The dollar also eased to ¥111.670 from ¥112.485 late Friday, and continued a decline against the Swiss franc and the British pound.

<snip>

The dollar would fall sharply if the rest of the world lost the appetite that is financing this deficit, a potentially nightmarish scenario. One reason the rise of the euro has failed so far to ignite much controversy in Europe is that the dollar is falling against a broad range of currencies, economists said. "The euro is playing its part but not the only part in bearing the brunt of the dollar's weakness," said David Bloom, a currency strategist with HSBC Holdings in London. "That helps mute the political reaction."

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http://www.iht.com/articles/2006/05/08/business/euro.php

[PinkTiger]

1. This is just great --

I'm getting ready to take a group of 35 people to Paris, and of course the euro is at an all-time high. So depressing.
Just another thing GWB has done to make my life worthwhile.

[villager]

2. don't ever misunderestimate GWB's helpfulness!

n/t

[paparush]

3. Send all payable receipts to Shrub Dimson c/o White House

[Lydia Leftcoast]

4. I'm watching the yen and the pound (due to upcoming travels)

and they're strengthening too.

[Art_from_Ark]

6. The yen is the highest it's been in more than 6 months

and it's gained about 5% against the dollar in just the past couple of weeks or so.

[villager]

8. wonder how the rise of gold is affecting the Euro...?

n/t

[sweetheart]

9. Pound's heavy indeed

.. bummer i don't want to buy anything from the US... ebay's
a 2 for 1 sale, and not worth it.

[madrchsod]

5. hmmmm ... euro goods are more expensive

than the american goods so we can under cut the price of euro goods...yup, but we don`t produce anything anyone in europe wants unless it`s yachts and airplanes....

[villager]

7. we'll have to make more movies!

The rightwingers have created an "entertainment economy," in spite of their hatred of films, theatre, books and stories...