Updates: Currency, Consumer Sentiment, Stimulus Package
The Euro has begun to lose a small amount of value against the dollar after its record high of $1.6019 earlier this week. The euro traded at $1.5685 late yesterday.
The dollar gained a small bit of value against Japanese currency. The dollar is worth 104.63 yen. This is up from the value of 104.22 yen earlier this week.
The British pound is now trading at 1.9763 dollars. Swiss francs are trading at 1.0349 dollars.
The Euro has remained strong against the dollar for several years, with its strength increasing during the US rate cuts made by the Federal Reserve. Since September of last year, the US Federal Open Market Committee has reduced the discount rate and the federal funds rate repeatedly. This has opened the door for inflation problems and weakened the strength of the dollar.
The European Central Bank has primarily focused on keeping inflation under control as much as possible, and has chosen to keep their interest rates the same. The primary focus of the US Federal Reserve Board has been to stimulate economic growth and increase liquidity in the markets to combat recession and a major credit crunch.
Experts speculate that the Federal Reserve will make at least one more modest rate cut in light of the inflation problem in the US. With inflation creating pressure on the FOMC, rate cuts will continue to be a difficult decision.
Meanwhile, according to the University of Michigan, consumer sentiment has decreased to its lowest point in nearly three decades. Gas and grocery prices are steadily increasing nationwide. The unemployment rate has risen beyond 5%, nearing 8 million people without jobs.
The economic stimulus package will be sent out early next week, and eligible consumers should see the checks for an amount between $300-$600 per person. Hopefully, the plan will work to give the economy a small boost over the course of the year.
