The dollar continues to weaken across the board on expectation that the Fed will cut interest rates by half a percentage point next week. The euro today hovers above 1.3860 and set a record high at 1.3927 versus the dollar. The sterling climbed above 2.03 to test a resistance at 2.0350 against the dollar.
The main focus of the market is still on the US economy. Last Friday‘s weak US non-farm payrolls surprised the market and indicated the impact of credit crunch may spread into every aspect of the nation¡¯s economy. It is widely expected that the Fed may need to lower its benchmark rates on September 18 policy meeting to avoid recession.
The dollar was little changed after US weekly jobless claims came out at 319k, slightly better than the estimate of 325k. Tomorrow will see a bunch of economic data, including Germany August CPI, euro-zone August HICP, Canada July manufacturing shipments, Canada Q2 labor production rate, US retail sales, US import and export prices, US Q2 current account balance, US industrial production, US August Capacity utilization, and University of Michigan consumer sentiment index. US retail sales are seen growing 0.4% in August, versus a 0.3% rise earlier. Excluding autos, core retail sales are expected to rise 0.2%, down from a 0.4% reading in the previous month.
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