Fed Outlook: European Shares Freeze As U.S. Dollar Dips
European shares froze on Monday, after their strong start to the fourth quarter while the dollar dipped towards three week lows, with investors skeptical the U.S. Federal Reserve would raise interest rates this year.
Chinese stocks jumped over 3 percent to seven week highs and the yuan currency hit its strongest level since its devaluation in August.
Despite a strong start to the fourth quarter for world stocks, investors remain concerned about the threat of slowing global growth even though central banks have pumped billions of dollars into their economies.
"This global economic slowdown would be less of an issue if it was not being made worse by deflationary pressures and did not occur at a time when confidence in central banks' ability to provide an effective solution is starting to be questionable," said Didier Saint-Georges, managing director and member of the investment committee at Carmignac.
The euro was up 0.2 percent at $1.1380 and the yen was 0.1 percent stronger at 120.11 to the dollar.
"We could get some further weakness in the dollar versus the euro and yen but those two are mainly along for the ride. Most of the weakness will be concentrated on emerging currencies," said Stephen Gallo, a strategist with BMO in London.
While the Fed debates when to raise rates, the European Central Bank is contemplating looser policy. ECB President Mario Draghi said the bank was ready to adjust the size, composition and duration of its trillion euro asset purchase program.
Currency Exchange International (CXI) is a leading provider of foreign currency exchange services in North America for financial institutions, corporations and travelers. Products and services for international travelers include access to buy and sell more than 80 foreign currencies, multi-currency cash passport’s and traveler’s cheques. For financial institutions, our services include the exchange of foreign currencies, international wire transfers, purchase and sale of foreign bank drafts, international traveler’s cheques, and foreign cheque clearing through the use of CXI’s innovative CEIFX web-based FX software www.ceifx.com.