Euro hits record for fifth consecutive day

Analysis

The euro jumped to a record high for the fifth consecutive day Wednesday surging to $1.4162 as concerns deepened about the US economic prospects. Crude prices drop below $80.

The common currency has climbed every trading day since last week’s aggressive interest rate cut by the US Federal Reserve underscored worries about the US economic growth outlook. This also led to forecasts of further reductions in US borrowing costs possibly as early as next month which in turn have helped to drive the euro towards its next critical mark, $1.45.

The euro’s push to a new record high follows the release of US economic data showing a slump in both consumer confidence as well as housing sales and comes ahead of a fresh batch of figures to be released later Wednesday. The US monetary authorities decision to deliver an aggressive 50-basis-point cut last Tuesday helped to narrow the interest rate differential with the 13-member eurozone. By mid-morning European trading Wednesday, the euro had edged back to $1.4135.

Crude prices dropped sharply Tuesday, settling below $80 a barrel. There was little news affecting oil prices Tuesday, analysts said. The prices declined as investors locked in profits from the recent record-setting rally. Light, sweet crude for November delivery fell $1.42 dollars to settle at  $79.53 a barrel on the New York Mercantile Exchange. In London, November Brent crude lost $1.29 to settle at $77.62 a barrel on the ICE Futures exchange. Crude futures set the highest record near $84 a barrel on Thursday, the day the October contract expired. The November crude contract has declined in every session since. (m&c.com, peopledaily.com)

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