US Dollar Gains While Others Continue to Slide
Europe Teeters on Brink of Recession
Eurozone moved closer to fears of recession yesterday as new data released showed second quarter growth had contracted for the first time since the inception of the Euro.
Spiralling commodity prices have surged inflation to 4% in July according to Eurostat, swallowing up growth potential and forcing the economy to contract 0.2% in the three months to June.
The European Central Bank is predicting the gloomiest of outcomes since the unification of the Eurozone in 1999.
Australian Dollar Slides Against US Comeback
The Australian Dollar suffered significantly, losing 11% in the last month and slumping to $0.8594, its lowest level in seven months. David Bloom of HSBC predicts little relief in the short term, with the next target being $0.85.
This is in sharp contrast to the 25 year high the Australian Dollar has enjoyed this year, reaching $0.9849 against the US on July 15 amidst talk of parity between the two currencies.
The crumble has been in part due to the recent drop in commodity prices and the Reserve Bank of Australia paving the way for interest rate cuts.
US Way Ahead Not Clear Yet
Data just released in the US shows consumer prices inflated twice as fast as predicted by economists in July, striking 5.6% annually, the highest level seen since 1991.
This jump, higher than expected by many currency speculators, dashed hopes of a short term solution to inflationary pressures in the US and signalled to Federal Reserve Policy Makers that economic concerns about rising prices will remain on the agenda for some time.