May 24, 2010
– Comments (6)
just 30 days ago. When Everyone was predicting $90-$100 oil by Memorial Day. HAHA
I am enjoying the cheaper gasoline and have a big smile everytime I fill up.
You see , we actually do have some things to thank the European Debt Mess, bringing down oil is a nice thing to see but it still is crushing financial stocks. The Spain news today on its big bank is a reminder that the crisis is far from over in Europe.
Euro Falls as Bank Failure in Spain Fuels Global Growth Concern
May 24, 2010, 9:53 AM EDT
By Oliver Biggadike and Matthew Brown
May 24 (Bloomberg) -- The euro declined, erasing all of last week’s advance against the dollar, as the Bank of Spain’s takeover of a failed lender drove concern that the region’s sovereign debt crisis may stall global growth.
The 16-nation currency dropped versus the greenback for the first time in four days as World Bank President Robert Zoellick told CNBC the European Union’s crisis may slow the U.S. economic recovery. The euro traded as low as $1.2349 as investors sold the currency to buy higher-yielding assets. Yuan forwards appreciated as President Hu Jintao said China will move gradually and independently in making changes to its exchange- rate mechanism.
“The larger concern is that growth is going to slow down,” said Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. “Sentiment is still negative. Whether people are looking for a straight line down or choppiness going down, it’s still pointing to more euro weakness ahead.”
The euro fell as much as 1.8 percent before trading at $1.2361 at 9:47 a.m. in New York, from $1.2570 on May 21. Last week’s advance of 1.7 percent from $1.2358 on May 14 was the biggest since September. Japan’s yen strengthened 1.3 percent to 111.64 per euro, from 113.13, and traded at 90.29 per dollar, compared with 90.
The 16-nation euro fell all of its most-traded counterparts after the Bank of Spain said on May 22 it appointed a provisional administrator to run CajaSur, a savings bank crippled by property-loan defaults.
“Weekend revelations that the Bank of Spain has acted to support a regional lender are likely to weigh on the euro,” Gareth Berry, a currency strategist at UBS in Singapore, wrote in a research note. “This will probably revive concerns about the broader stability of the euro-zone banking system.”
Brazil’s real appreciated 1.8 percent to 2.2885 versus the euro and Australia’s dollar advanced 1.5 percent to A$1.4883 as the fastest convergence in short-term interest rates in almost a year is making the euro an addition to currencies used to finance investments in higher-yielding assets.
Borrowing in euros to finance an investment in the Australian dollar, New Zealand dollar, Brazilian real and Norwegian krone returned 10 percent in the past six months, according to data compiled by Bloomberg. The same trade using the dollar instead of the 16-nation currency resulted in a 7.5 percent loss.
Europe’s currency has lost 6.9 percent this year, based on Bloomberg Correlation-Weighted Indices. The dollar has risen 9.6 percent, and the yen has advanced 13 percent.
Yuan forwards advanced from near their weakest level in eight months after Hu said as talks with the U.S. opened in Beijing today that China will continue to “steadily advance” reform “under the principles of independent decision-making, controllability and gradual progress.”
Non-deliverable 12-month yuan forwards strengthened 0.2 percent to 6.7250, while the yuan was little changed at 6.8287. The forwards traded at to 6.7750 on May 20, the weakest since September 2009.
U.S. Treasury Secretary Timothy F. Geithner will tell his Chinese counterparts this week that Europe’s debt crisis should have only a small effect on the recovery, a U.S. official told reporters in Beijing.
Sterling appreciated 0.8 percent to 86.25 pence per euro as the U.K.’s Chancellor of the Exchequer George Osborne announced 6.25 billion pounds ($9 billion) of spending reductions to contain a budget deficit that is the biggest in the Group of Seven nations. Concern that Britain will struggle to cut the shortfall has contributed to a 3.6 percent decline in the pound this year, according to Bloomberg Correlation-Weighted Indices.
‘Stay of Execution’
“The market’s giving the new government a reasonable stay of execution, wanting to see how definitive they are in the budget-deficit stakes,” said Jeremy Stretch, a senior currency strategist at Rabobank International in London. “The 6 billion pounds of cuts today are a step in the right direction. For now, markets are cautiously rewarding sterling.”
The Dollar Index rose for the first time in four days, increasing 1.1 percent to 86.310 before U.S. reports forecast to show the housing market is improving and consumers turned the most optimistic in 20 months.
Existing home sales rose to an annual rate of 5.65 million in April, from 5.35 million in the previous month, according to a Bloomberg survey before the National Association of Realtors report today. The Conference Board’s confidence index climbed to 59 this month from 57.9 in April, according to another survey before tomorrow’s data. That would be the highest since September 2008.
“The U.S. is experiencing a V-shaped recovery,” said Adam Carr, a senior economist at ICAP Australia Ltd. in Sydney. “Against this backdrop, the greenback is likely to be supported.”
--With assistance from Ron Harui in Singapore, John Brinsley in Tokyo and Bomi Lim in Seoul. Editors: James Holloway, Dave Liedtka
To contact the reporters on this story: Oliver Biggadike in New York at email@example.com; Matthew Brown in London at firstname.lastname@example.org.
To contact the editor responsible for this story: Dave Liedtka at email@example.com
The Spain news today on its big bank
Its big bank? Are you talking about CajaSur?
CajaSur Seizure Marks Change for Spain’s Ailing Banks
CajaSur represents 0.6 percent of Spanish banking industry assets and depositors and creditors can be “totally calm” as the lender will function normally under the oversight of the government fund, the Bank of Spain said in the statement.
Mid-grade gasoline reached $3.19 in my area when oil prices peaked. After oil prices have fallen 20%+, guess how much gas prices have fallen in my area...exactly $0.00! What's going on? I see articles almost everyday about how gas prices are coming down. I become furious every time I fill up.
I become furious every time I fill up.
Gas prices "in my area" are around $7 and have been above $5 for a decade (I think. Maybe for 2 decades.). Not such a big deal ...
@ #5 Germany has a better public transport system overall than we have. Where I am, I could take the bus which stops every couple blocks for ten miles of our commute, but then I'd have to walk another ten miles to make it home. Gasoline is a big deal when one doesn't have affordable public transport options.
One thing that I liked about the places I went to in the UK (my sole experience of Europe) is how pedestrian friendly they were with inexpensive and reasonably safe public transport. It is unfortunate that in the U.S. generally a woman walking alone for any distance gets more attention than she wants.