Dollar Hits 15 Month Low Monday
The US dollar pulled back from a fifteen month low as declining US stocks pared demand for riskier assets. The dollar is often seen as a barometer of risk sentiment among investors and traders. The pound fell sharply on news that Fitch’s Ratings said that the UK was the major economy most at risk among major economies. The Brazilian real fell the most against the dollar on concerns that the Brazilian government would intervene and try to stop the real’s appreciation which is hurting exports. The Dollar Index rose 0.2% to 75.145 but the index has lost 7.7% so far this year.
Pound Hit by Rating Concerns
The pound pulled back from a six day run against the dollar and fell 0.3% to $1.6712. Fitch Ratings had cautioned the UK government against further stimulus measures citing massive UK debt. David Riley of Fitch stated, “Our stable rating outlook reflected our expectation that the U.K. government will articulate a stronger fiscal consolidation program next year.”
Canadian Dollar Gains
The Canadian dollar gained against the green back as a rise in oil prices sent the commodity based currency higher in currency markets. The currency last traded at 95.26 U.S. cents. David Bradley of Scotia Capital stated, “Everything seems to have turned around at once here. And it looks to me like the Canadian dollar can probably continue to do better.” The rise came after oil edged above $80 a barrel and the promise of the G 20 nations to maintain stimulus policies.
Gold Futures at Record Highs
The decline of risk sentiment has sent gold futures to record highs and many traders predict gold will rise to $1,150 or as much as $1,200 an ounce. The European economy sent mixed signals. Italy and France reported sharp falls in while German output surged. Italian output declined 5.2% and French output fell by 1.5% in September. US Federal Reserve officials are expected to speak on Tuesday and investors will be watching for any signs of changes in monetary policies.
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