The Dollar: How Low Can It Go?

Last week the dollar touched a new low, and with economic news from the U.S. not making for entirely comfortable reading, there is likely more pain to come.

The Federal Reserve is due to meet again later this month, and it would surprise no one if the outcome of that meeting were to be another rate cut – perhaps by a quarter point following last month’s drastic half point cut.

Hence the dollar’s weakness this week, as it was the Fed’s last cut that set the currency sliding once again and gave the gold price the energy it needed for its run up to current levels.

But why are people so confident in the Fed’s next move? Well, economic indicators from the U.S. still aren’t looking good, despite the Fed’s last rate cut. The recent poor financial results from Bank of America, the jump in unemployment benefit claimants, and the news that U.S. home starts are significantly down all sow the seeds of worry.

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