Dollar May Fall Further After Reaching Lowest in Almost a Year

By Oliver Biggadike and Ye Xie

Sept. 17 (Bloomberg) — The dollar may extend its decline after sliding to the weakest level versus the euro in almost a year as an increase in America’s industrial output encouraged investors to shift funds to higher-yielding assets.

The euro gained yesterday versus the dollar as traders succeeded on their third attempt at pushing the currency past $1.4720, a technical level just above the Dec. 18 high. The Mexican peso and South African rand were two of the biggest winners against the dollar and yen among the 16 most-traded currencies tracked by Bloomberg, on increased risk demand.

“We are in an environment that is constructive for growth,” said Lauren Rosborough, a currency strategist in London at Westpac Banking Corp. “It is positive for high- yielding, high-beta currencies. We are seeing evidence that cash is moving out of banks.”

The dollar changed hands at $1.4713 per euro at 6:04 a.m. in Tokyo, after trading yesterday at $1.4737, the weakest level since Sept. 25, 2008. The yen was at 90.93 per dollar and touched 90.13, the strongest level since Feb. 12. Japan’s currency fetched 133.78 per euro.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aABBJcLqBQ9E

Is the Dollar Set to Become the New Yen?

By Matt Phillips

Bloomberg NewsInvestors have long borrowed and sold the Japanese currency en masse, using the proceeds to snap up higher-yielding assets outside the land of the rising sun. Dubbed “the carry trade,” the strategy generated hefty returns until the world economic crisis soured investor bets, sending them scurrying back to buy yen and close out their positions.

Now, some currency watchers say investors are getting tempted into to giving the carry trade another try, only this time investors are considering using the dollar as the base of the trade. That could help explain some of the slide the buck has suffered lately and — if true — it’d likely mean more downward dollar pressure to come.

http://blogs.wsj.com/marketbeat/2009/09/16/is-the-dollar-set-to-become-the-new-yen/

Go for Gold: Inflation Is Here and Going to Get “Much, Much Worse,” Pento Says

by Aaron Task in Investing, Commodities

•Bernanke says recession ‘very likely over’ – AP

•Fed Chief Says Recession Is ‘Very Likely Over’ – NYT.com

•Bernanke Sees Recession’s End – WSJ.com

As is so often the case, Tuesday afternoon’s headlines missed the nuance of the story. Ben Bernanke’s full statement told a much less ebullient tale: “From a technical perspective, the recession is very likely over at this point,” he said. “It’s still going to feel like a very weak economy for some time because many people will still find that their job security and their employment status is not what they wish it was.”

http://finance.yahoo.com/tech-ticker/article/332860/Go-for-Gold-Inflation-Is-Here-and-Going-to-Get-%22Much-Much-Worse%22-Pento-Says?tickers=GLD,EGO,GEX,TIP,TLT,TBT,UDN

All of a sudden, Congress is paying close attention to Ron Paul.

The feisty congressman from Texas, whose insurgent “Ron Paul Revolution” presidential campaign rankled Republican leaders last year, now has the GOP House leadership on his side — backing a measure that generated paltry support when he first introduced it 26 years ago.

Paul, as of Tuesday, has won 245 co-sponsors to a bill that would require a full-fledged audit of the Federal Reserve by the end of 2010.

Paul attracted just 18 co-sponsors when he authored a similar bill, which died, in 1983. While the impact Fed policies have on inflation is once again a concern, fears about loose monetary policy and excessive federal spending appear even more widespread in 2009.

“In the past, I never got much support, but I think it’s the financial crisis obviously that’s drawing so much attention to it, and people want to know more about the Federal Reserve,” Paul told FOXNews.com.

With the Federal Reserve holding interest rates at rock-bottom levels, pumping trillions into the economy and now poised to have new powers to oversee the financial system under President Obama’s proposed regulatory overhaul, Paul said lawmakers want transparency.

“If they give them a lot more power and there’s no more transparency, that’ll be a disaster,” he said.

The bill would call for the comptroller general in the Government Accountability Office to audit the Fed and report those findings to Congress. The GAO’s ability to conduct such audits now is severely restricted.

A slew of top Republicans are backing the bill, as are many Democrats.

“Ron Paul has the right idea on this,” said Sen. Jim DeMint, R-S.C., who supports similar legislation in the Senate. “I’m just hoping we can get a clear audit. … We need to know what they’re up to.”

http://www.foxnews.com/politics/2009/06/24/mr-popular-rep-paul-wins-supporters-fed-sunshine/