Look out Below: Dollar Losses Accelerating

To be forewarned is to be forearmed: Risks are mounting that the US dollar’s slide accelerates into the end of the year. While the $1.4570 area, the euro equivalent of the old Deutschemark record high from 1995, is the obvious near-term objective, the combination of market sentiment and deteriorating interest rate support for the dollar, warns of risk toward $1.50.

G7 is Overshadowed

Another G7 meeting is upon us. It is the first such gathering since the market turmoil began and the acceleration of the US dollar’s decline. Some observers have suggested that it may be one of the most important G7 meetings in years. More likely though such hopes will be dashed and the G7 meeting will be overshadowed by two other gatherings, China’s Party Congress and the IMF meeting.

And Now What? Q4 and Beyond

The closing of a couple of European bank managed funds and the failure to secure financing for two large acquisitions in August marked the beginning of the credit crisis in earnest. The rally in US share prices that lifted the Dow Jones Industrials and S&P 500 to new record highs and the September US jobs data, coupled with the sharp upward revision to the August series, revising away the contraction initially reported, marks the end of the crisis, even if the money markets have not entirely normalized.