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Author`s name zamiralov tech

Euro Going Down Together with Gold

The market has missed the chance. Analysts say one should get rid of the euro

It seems that American and European currencies have stopped competing. Interests in the real economy are prevailing. In an interview to The Financial Times, German Chancellor Gerhard Schroeder urged the European Central Bank to reduce the refinancing rate and to weaken the euro in order to keep European exports competitive. One shall assume that common sense is finally winning: the overpriced euro rate deprives European businessmen of their profits and casts doubts on the future of their businesses.

On July 14, the euro rate dropped against the dollar 1.1270 dollars per euro. On Friday night, one euro cost 1.1276 dollars in New York. However, it is not ruled out that the European currency rate will drop even more in the nearest future. Specialists say, one should get rid of the euro, and it seems that it is only the beginning.

Gerhard Schroeder said in his interview that he hoped the people of the European Central Bank were doing everything to maintain the competitivenes of European exports against the background of the  dollar/euro exchange rates. Investors perceived Schroeder's statements as the first token of the economic change in the eurozone. However, they are not rushing to draw conclusions, waiting for Federal Reserve Chairman Alan Greenspan to deliver a speech to the US Congress. In addition, investors are waiting for corporate reports to be posted.

Traders say, they have been waiting for a serious correction of the euro rate in connection with expectations for the American economic improvement. This optimism is backed with the fact that the Fed reduced the refinancing rate to one percent per annum at the end of June. The American dollar started rising against the background of a higher American stock market. Yet, since the stock market growth is not 100 percent assured, dealers are not in a hurry to trade. They are waiting for the publication of data on retail sales and the consumer price index in the USA.

"At this point, I still do not know whether the euro is simply under-going a correction or it is a trend for the reduction," Masamity Konke, Vice President of the Sumitomo Mitsui Banking Co. told RBC news agency. "The speech from Alan Greenspan will be extremely important In this respect, and I think that an optimistic forecast will push the dollar further up."

Other analysts do not doubt that the European currency will decrease in the future too. The weekly result of the dollar-euro rate lower than 1.1385 implies the further reduction of the European currency, a specialist from Merrill Lynch believes. Analysts expect, one should expect the 1.1000/1.1100 level to be tested soon, and the euro might drop to 1.0700. The euro is going down. The market had an opportunity to return to the growing trend, but the market missed the chance.

In the meantime, gold prices are reducing against the background of the dollar growth vs. the euro. A weaker euro is making gold too much expensive for eurozone customers. Gold has already become 6.4 percent cheaper since May 23, Bloomberg reports. Another negative factor that affects the price of gold is the growth of quotations of American stocks, which increases the attraction of stock investments. The cost of gold in August on NYMEX gained 50 cents on Friday - $345.10 per ounce - and dropped by 1.8 percent last week.

The dollar is strenthening in Russia as well. The weighted average dollar rate against the Russian ruble increased on the Moscow Inter-Bank Currency Exchange by 1146 points (one point equals 0.01 kopecks) and made up 30.4955 rubles per one American dollar.

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