Euro Hits Record High against the U.S. Dollar
As predicted by analysts, the Euro surged against the U.S. Dollar because of lack of a concerted effort by the G7 to halt deprecation of the U.S. Dollar against major currencies. In addition, investors believe that poor economic conditions in the U.S. coupled with the liquidity crisis will necessitate the Federal Reserve to cut interest rates from the current level of 2.25%.
According to Paul Robson, strategist of Royal Bank of Scotland Global Bank, “there is quite a lot of momentum behind the Euro.” He believes that the Euro will surpass the $1.60 within the coming weeks.
Investors are anxiously waiting to hear from Axel Weber, the European Central Bank Governing Council Member, today about what the ECB intends to do with interest rates given record inflation in the Euro Zone. However, analysts believe that interest rates in the Euro Zone will remain unchanged at 4%.
On April 17, 2008, in London, the Euro traded at $1.5965 after a record of $1.5977 on Wednesday. U.S. housing starts data show that in February housing starts fell by 11.9% and consumer prices in March increased 0.3%, less than expected.