Euro lost ground vs. Dollar

The Euro has been losing ground to the US Dollar for the past three weeks, and apparently hit its floor yesterday at nearly 83 Euro cents to the Dollar. Today the Dollar is back to 82.1 Euro cents. This is obviously still much stronger than the 77 cent region it had touched two weeks ago.

The trigger (supposedly) for this decline of the Euro were the expectations for todays ECB (European Central Bank) meeting. With slow growth in Europe, they don't want a rising Euro to kill off their exports. So the ECB had made all sorts of noises it would stop this one way or the other, but didn't actually do anything. Now, with the Dollar higher, the ECB can hold the line on rates.

I'm not sure I trust that explanation is complete. I think some people decided it was time to cash in their gains and pick up some cheap US assets along the way. The smarter people (like Soros) have been betting openly against the Dollar for a couple of years now and have made a lot of money. So some profit taking might be cycling through the system. Then again, what do I know. All I know is that this is a very volatile FX market and there is a lot of stuff going on. I still think the underlying math works against the greenback, but these things take time when the scale is so huge.

Friday the US jobs figures come out, by the way, and that will be interesting, as the political scene starts to heat up with a confirmed Democratic candidate. The expectation is 125,000 new jobs.

We'll see how many hamburger flipping manufacturing jobs have been added to the bush economy.