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Dollar May Extend Two-Year Decline Versus Euro on Slower Growth

By MadMoneyWannabe     Jan 3, 2008 in Business
The U.S. Dollar may continue to extend to a two-year decline versus the euro due to the slowing economy. This will make U.S. assets less attractive to investors in foreign regions.
According to Bloomberg, U.S. currency has fallen against 14 of the 16 most-actively traded currencies in 2007 as the Fed continued to try to reduce borrowing costs to soften the worst housing slump since 1991. The unemployment rate continued to increase last month to its highest point since July 2006, according to a survey conducted by Bloomberg,
The U.S. economy will be pushed close to the recession level, said Greg Salvaggio of Tempus Consulting. According to Salvaggio, there will be more weakness in the dollar in 2008.
The dollar had lost about 9.5 percent against the euro in 2007 to about $1.458 as it followed a 10.2 percent drop from 2006. Though the dollar had increased after a report made by the National Association of Realtors, it showed that purchases of existing homes has also rose in November.
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