The dollar plummeted to record lows yesterday

The dollar plummeted to record lows yesterday as retail sales figures confirmed that the US is in recession and concern intensified about spreading distress in the hedge fund sector. Retail sales came in negative 0.6% from an expected 0.2% rise. In a turbulent day of trading, the US dollar tumbled against the Yen, breaking through the Y100 to the dollar for the first time since 1995, before recovering to Y100.79. The greenback dropped to a record low against the euro as it broke the $1.56 barrier—at which point Goldman Sachs estimated that the eurozone had overtaken the US as the worlds biggest economy measured by market exchange rates before easing slightly. The dollar was also down to a record low for the year against sterling as it hit over $2.03. The Fed’s Open Market Committee meets next Tuesday and is widely expected to lower interest rates, with many analysts forecasting a drop of 0.50%. However, in the past few weeks investors have been questioning whether another rate cut will help the economy.

Data at 12.30: Consumer Price Index MoM expected at 0.3% from 0.4% previous .
At 2.00pm we have the University of Michigan Conference and then the Fed’s Chairman ‘Bernanke’ to speak at 5.00pm.