Forex - Dollar near lows economic and credit worries
The Dollar slumped on Thursday, hitting its lowest level against the Euro in nearly three weeks, as investors reduced their expectations for a Federal Reserve interest rate rise this year.
While the Federal Reserve on Wednesday said inflation risks had increased, it did not use language that convinced markets a rate rise was likely at its next policy meeting in August. In contrast, the ECB has repeatedly said it may lift interest rates in July to fight inflation. That helped push the Euro near a three-week high at 1.5768. The US central bank’s move to leave interest rates unchanged on Wednesd y effectively ended one of its most aggressive rate-cutting campaigns, launched last September to curb economic fallout from the housing and credit crisis.
US financial stocks plummeted while shares of General Motors sank more than 10%. Fitch Ratings’ downgrade of General Motors and Chrysler credit ratings also hit the Dollar, as did the Dow’s drop to its lowest level in 21 months. Oil prices on