Tag Archives: Euro

>MasterMetals: Precious Metals Charts in Euros, USD and CAD


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Gold, Silver, Platinum and Palladium Charts in Euros

Prices in Euros per ounce and per kilo in 8 and 24 hour intervals

 
Gold
Price per ounce
8 hour
24 hour

Price per kilo
8 hour
24 hour

Source: KitcoCharts,/Kitco.com

 

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>Higher Rates Likely to Keep Euro Rising – WSJ.com


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Higher Rates Likely to Keep Euro Rising – WSJ.com 
NEW YORK—Currency investors’ scramble for yield is likely to lift the euro against the dollar this week, but rising concerns about the euro-zone’s sovereign-debt crisis could curb the common currency’s gains.

Zuma Press

The European Central Bank, headed by President Jean-Claude Trichet, right, is expected to keep raising interest rates in the months ahead as the Federal Reserve leaves rates near zero.
The European Central Bank is expected to continue raising rates in the months ahead while the Federal Reserve leaves U.S. rates near zero for the rest of this year, a prospect that is boosting the euro.
The euro hurdled $1.45 for the first time since January 2010 last week, before pulling back slightly, while some big foreign-exchange banks have raised their forecasts for the common currency. Deutsche Bank and Citigroup now both expect the euro to rise toward $1.50 in coming months.
“The biggest driver for two months now has really been interest rates, interest rates and, of course the third thing being, interest rates,” said Jonathan Wetreich, a currency strategist with Brown Brothers Harriman.
As worries grew last week that Greece will eventually need to restructure its debt, and as Moody’s Investors Service downgraded Ireland’s credit rating on Friday, the euro retreated against the dollar, but only to the $1.44 area, still among the strongest levels it has seen this year.
Late Friday, the euro was at $1.4427 from $1.4494 late Thursday. The dollar was at ¥83.08 from ¥83.45.
Interest-rate differentials will likely push the euro even higher in the week ahead, analysts said.
“It’s really a question of whether the euro is getting to a valuation where it’s harder to keep going, but I think it will keep going,” said Adnan Akant, head of foreign exchange and managing director at money manager Fischer Francis Trees & Watts, a New York unit of BNP Paribas. The money manager is still betting on the euro to rise, though it’s not an “overemphasized” position, he said.
“If you clear your head and think about what’s going on, it’s still an interest-rates story,” he said.
The spread between the euro and dollar two-year swap rate touched its highest level since 2008 on Friday, and if it continues to widen, it will be euro-supportive, said Ron Leven, a strategist with Morgan Stanley.
Deutsche Bank raised its euro forecast Friday, projecting the euro will rise to near $1.50 in the next three to six months. The bank had previously expected the euro to trade within a $1.25 to $1.40 range against the dollar throughout 2011. Citigroup now expects the common currency at $1.50 over six to 12 months, up from a previous forecast of $1.45.
Meanwhile, J.P. Morgan Asset Management, one of the world’s biggest asset-management firms, has abandoned its bet on a decline in the euro against the dollar, said Robert Michele, global chief investment officer for the New York, London and Asia investment teams of J.P. Morgan Asset Management’s Global Fixed Income Group, in a phone interview Friday.
However, the euro-zone debt crisis still poses a risk for the euro, analysts said.
If Greece is forced to restructure its debt, it “is likely to send a shockwave” through the euro zone and its currency, said Brian Dolan, chief currency strategist at Forex.com.
In addition, Finland, which is the only euro-zone country that requires bailouts to be approved by parliament, held parliamentary elections Sunday. The anti-bailout True Finns Party appeared to make a strong showing, according to exit polls, and that could raise fears about whether the results will undermine a planned rescue for Portugal.
Investors continue to view Spain as the real tipping point, though it seems to be on solid ground for now because of headway on reforms and fiscal austerity measures. But market analysts are keeping a close eye on the shaky Spanish housing market, the country’s high jobless rate and its vulnerable savings banks.
If such sovereign-debt jitters still weigh on the currency this week, it could mean a mild rebound for the U.S. dollar, Mr. Dolan said.

—Min Zeng contributed to this article

Bernanke on CBS’s ‘60 Minutes’ – Real Time Economics – WSJ


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Bernanke on CBS’s ‘60 Minutes’

Federal Reserve Chairman Ben Bernanke appeared Sunday evening on CBS’s “60 Minutes” to discuss the state of the economy, the central bank’s controversial $600 billion bond-buying plan and the financial crisis. Following are excerpts from the interview with CBS’s Scott Pelley, as released by the network:
Q: The major banks are racking up profits in the billions. Wall Street bonuses are climbing back up to where they were. And yet, lending to small businesses actually declined in the third quarter. Why is that?

A: A lot of small businesses are not seeking credit, because, you know, because their business is not doing well, because the economy is slow. Others are not qualifying for credit, maybe because the value of their property has gone down. But some also can’t meet the terms and conditions that banks are setting.
Q: Is this a case of banks that were eager to take risks that ruin the economy being now unwilling to take risks to support the recovery?

A: We want them to take risks, but not excessive risks. we want to go for a happy medium. And I think banks are back in the business of lending. But they have not yet come back to the level of confidence that –or overconfidence –that they had prior to the crisis. We want to have an appropriate balance.
Q: What did you see that caused you to pull the trigger on the $600 billion, at this point?

A: It has to do with two aspects. the first is unemployment The other concern I should mention is that inflation is very, very low, which you think is a good thing and normally is a good thing. But we’re getting awfully close to the range where prices would actually start falling.
Q: Falling prices lead to falling wages. It lets the steam out of the economy. And you start spiraling downward. … How great a danger is that now?

A: I would say, at this point, because the Fed is acting, I would say the risk is pretty low. But if the Fed did not act, then given how much inflation has come down since the beginning of the recession, I think it would be a more serious concern.
Q: Some people think the $600 billion is a terrible idea.
A: Well. I know some people think that but what they are doing is they’re looking at some of the risks and uncertainties with doing this policy action but what I think they’re not doing is looking at the risk of not acting.
Q: Many people believe that could be highly inflationary. That it’s a dangerous thing to try

A: Well, this fear of inflation, I think is way overstated. we’ve looked at it very, very carefully. We’ve analyzed it every which way. One myth that’s out there is that what we’re doing is printing money. We’re not printing money. The amount of currency in circulation is not changing. The money supply is not changing in any significant way. What we’re doing is lowering interest rates by buying treasury securities. And by lowering interest rates, we hope to stimulate the economy to grow faster. So, the trick is to find the appropriate moment when to begin to unwind this policy. And that’s what we’re going to do.
Q: Is keeping inflation in check less of a priority for the Federal Reserve now?

A: No, absolutely not. What we’re trying to do is achieve a balance. We’ve been very, very clear that we will not allow inflation to rise above two percent or less.
Q: Can you act quickly enough to prevent inflation from getting out of control?

A: We could raise interest rates in 15 minutes if we have to. So, there really is no problem with raising rates, tightening monetary policy, slowing the economy, reducing inflation, at the appropriate time. Now, that time is not now.
Q: You have what degree of confidence in your ability to control this?

A: One hundred percent.
Q: Do you anticipate a scenario in which you would commit to more than 600 billion?

A: Oh, it’s certainly possible. And again, it depends on the efficacy of the program. It depends, on inflation. And finally it depends on how the economy looks.
Q: How would you rate the likelihood of dipping into recession again?

A: It doesn’t seem likely that we’ll have a double dip recession. And that’s because, among other things, some of the most cyclical parts of the economy, like housing, for example, are already very weak. And they can’t get much weaker. And so another decline is relatively unlikely. Now, that being said, I think a very high unemployment rate for a protracted period of time, which makes consumers, households less confident, more worried about the future, I think that’s the primary source of risk that we might have another slowdown in the economy.
Q: You seem to be saying that the recovery that we’re experiencing now is not self-sustaining.

A: It may not be. It’s very close to the border. — it takes about two and a half percent growth just to keep unemployment stable. And that’s about what we’re getting. We’re not very far from the level where the economy is not self-sustaining.
Q: [On calls to cut the deficit]

A: We need to play close attention to the fact that we are recovering now. We don’t want to take actions this year that will affect this year’s spending and this year’s taxes in a way that will hurt the recovery. That’s important. But that doesn’t stop us from thinking now about the long term structural budget deficit. We’re looking at ten, 15, 20 years from now, a situation where almost the entire federal budget will be spent on Medicare, Medicaid, Social Security, and interest on the debt. There won’t be any money left for the military or for any other services the government provides. We can only address those issues if we think about them now.
Q: How concerned are you about the calls that you’re beginning to hear on Capitol Hill that would curb the Fed’s independence?
A: Well, the Fed’s independence is critical. The central bank needs to be able to make policy without short term political concerns. In order to do what’s best for the economy. We do all of our analysis, we do all of our policy decisions based on what we think the economy needs. Not based on when the election is or what political conditions are.
Q: Is there anything that you wish you’d done differently over these last two and a half years or so?

A: Well, I wish I’d been omniscient and seen the crisis coming, the way you asked me about, I didn’t, But it was a very, very difficult situation. And– the Federal Reserve responded very aggressively, very proactively
Q: How did the Fed miss the looming financial crisis?
A: there were large portions of the financial system that were not adequately covered by the regulatory oversight. So, for example, AIG was not overseen by the Fed. … The insurance company that required the bailout, was not overseen by the Fed. It didn’t really have any real oversight at that time. Neither did Lehman Brothers the company that failed Now, I’m not saying the Fed should not have seen some of these things. One of things that I most regret is that we weren’t strong enough in in putting in consumer protections to try to cut down on the subprime lending problem. That was an area where I think we could have done more.
Q: The gap between rich and poor in this country has never been greater. In fact, we have the biggest income disparity gap of any industrialized country in the world. And I wonder where you think that’s taking America.

A: Well, it’s a very bad development. It’s creating two societies. And it’s based very much, I think, on– on educational differences The unemployment rate we’ve been talking about. If you’re a college graduate, unemployment is five percent. If you’re a high school graduate, it’s ten percent or more. It’s a very big difference. It leads to an unequal society and a society– which doesn’t have the cohesion that– that we’d like to see.
Q: We have talked about how the next several years are going be tough years in this country. But I wonder what you think about the ten year time horizon. Fifteen years. How do things look to you long term?

A: Long term, I have a lot of confidence in the United States. We have an excellent record in terms of innovation. We have great universities that are involved in technological change and progress. We have an entrepreneurial culture, much more than almost any other country. So, I think that in the longer term the United States will retain its leading position in the world. But again, we gotta get there. And we have some very difficult challenges over the next few years.
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Bernanke on CBS’s ‘60 Minutes’ – Real Time Economics – WSJ

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The MasterFeeds

MasterFeeds: Weekly Recap, And Upcoming Calendar


Weekly Recap, And Upcoming Calendar
– All Eyes On December 7 And The Irish Budget/European Bank Run – zerohedge.com
From Goldman Sachs
Week in Review

The European / IMF bail-out package for Ireland – announced one week ago – was somewhat smaller than expected at €85 bn and failed to calm market jitters spreading to other Euro zone periphery countries early in the week, most alarmingly to Spain and Italy. It was only with the ECB’s announcement that full allotment liquidity operations would continue through Q1 2011 and with a jump in ECB purchases of Portuguese government bonds on Thursday that stress in the Euro zone periphery abated somewhat.

United States labor market data were weaker than expected, with the unemployment rate jumping to 9.8%, even as the participation rate failed to rise from its very low level of 64.5%. The broadest measure of underemployment (U-6) remains stuck close to its peak level at 17.0%. After much market criticism of QE2, the weak state of the labor market in Friday’s data was seen as validating the Fed’s resumption of large scale asset purchases.

We published our global forecasts last week, as well as an initial batch of our top trades for 2011. The key feature of our forecast revisions is an upgrade to US growth to 2.7% in 2011 from 2.0% previously. This puts us slightly above consensus. On the back of this forecast revision, and with a view that the Fed will likely stay on hold through end-2012, our top trades have a decidedly pro-cyclical flavor. In FX, our top trade is short $/CNY via 2yr NDF.

Week Ahead

Central bank meetings Central banks will be meeting this week in Australia, Brazil, Canada, New Zealand, South Korea and the UK. We expect all of these meetings to keep policy rates on hold. Perhaps the most interesting meeting will be Brazil, where the central bank last week announced several measures to tighten domestic liquidity, perhaps indicating a shift to a more hawkish stance. We will be watching carefully for the minutes of the meeting, which will be published next week. In addition, it is also worth noting that this will be Governor Henrique Meirelles’ last Copom meeting, before his successor Alexandre Tombini takes over in January.

Euro zone crisis Following last week’s turbulence on the periphery, this week’s key event will be the Irish parliament vote on the 2011 budget, which is scheduled for Dec 7. A failure to pass the budget could quickly exacerbate tensions across the Euro zone periphery, by highlighting the political costs of needed budget cuts.

Monday 6th

Chile monthly indicator of economic activity (Oct) We expect this indicator to register growth of 6.0% yoy, above consensus of 5.8% yoy but down from 6.5% yoy in September.

Also interesting Taiwan CPI inflation for Nov, given our focus on food price inflation in EM

Tuesday 7th

Australia central bank meeting We expect the RBA to stay on hold at 4.75%, in line with consensus. Bank bill futures are pricing essentially a zero probability of a rate hike as well. We think the RBA will be confident about tightening monetary policy again from March next year, as the data flow should improve from what we see as a mid-cycle slowdown going into 2011.

UK industrial production (Oct) We expect IP to expand 0.3% mom, in line with consensus, after an expansion of 0.4% mom in September.

Irish parliament votes on 2011 budget

Chile CPI (Nov) We expect CPI inflation of 2.5% yoy, in line with consensus and up from 2.0% yoy in October. Consensus expects CPI excluding perishables and fuel to be flat mom, after a -0.1% mom drop in October.

Chile trade balance (Nov) We expect a trade surplus of $980 mn, below consensus which is looking for a surplus of $1,311 mn. Either way, there will be a big jump from October’s surplus of $215 mn.

Canada central bank meeting In line with consensus we think the Bank of Canada will remain on hold. Indeed, even though we upgraded our Canada growth forecast this week, we continue to believe that the Bank of Canada will remain on hold throughout 2011, as it looks over its shoulder at the Fed’s QE2.

Also interesting Philippines CPI for Nov, given our focus on food price inflation in EM

Wednesday 8th

Germany industrial production (Oct) We expect a strong print of 1.2% mom, slightly above consensus of 1.0% mom after a relatively weak reading of -0.8% mom in September.

Turkey industrial production (Oct) We expect a reading of 7.0% yoy, above consensus of 6.4% yoy, but down from 10.4% yoy in September.

Brazil IPCA inflation (Nov) Following the elevated reading for the IPCA-15, we expect IPCA inflation in November to be 0.92% mom, which is above consensus of 0.86% mom.

Brazil central bank meeting We expect the Copom to remain on hold at this meeting, in line with consensus. Last week’s reserve requirement hike and other measures could be seen as a shift to a more hawkish stance by the central bank, but whether or not this raises the probability of a hike this week depends on whether one sees this as a substitute or complement to a hike. Our economists think the latter and believe the probability of a rate hike has gone from something like 25% before last week’s measures to 45% now.

Thursday 9th

Australia employment report (Nov) We expect the unemployment rate to drop to 5.2% from 5.4% in October, in line with consensus, as we think the participation rate drops back from its higher level after last month’s jump. We think the strong trend of employment growth will continue. We are looking for +25k employment change, above consensus of +20k.

New Zealand central bank meeting In line with consensus, we expect the RBNZ to remain on hold this week.

South Korea central bank meeting We maintain our view of no rate hikes in the December and January Monetary Policy Committee meetings. We expect the next rate hike, 25 bps, to be in February 2011.

UK central bank meeting We expect the Bank of England to keep rates unchanged.

Brazil GDP (Q3) We are looking for growth of 0.5% qoq, above consensus of 0.4% qoq but below the strong pace of 1.2% qoq in Q2.

United States initial claims (Dec 4) Consensus expects initial claims of 425k, following 436k last week.

Friday 10th

China trade balance (Nov) We expect November export growth to accelerate to 27.0% on a yoy basis, from 22.9% yoy in October. Meanwhile, we believe import growth will rise to 26.0% yoy, from 25.3% yoy in October. This implies net exports will likely stay at a high level of around US$25.0 bn, slightly lower than US$27.1 bn in October. Our estimate for the trade balance is thus above consensus ($21 bn).

Turkey GDP (Q3) Consensus expects growth of 6.5% yoy, down from 10.3% yoy in Q2.

United States trade balance (Oct) We expect the trade deficit to narrow to -$40.5 bn, against consensus which expects the trade deficit to remain unchanged from the September reading at -$44.0 bn.

United States U. of Michigan consumer confidence (Dec) Consensus expects this preliminary reading to be 72.5, up from 71.6 for the November reading.


View article…

China’s gold investment demand grew by 121% in 2Q- Central Banks buy more gold- World Gold Council Report ( WGC)


World Gold Council Report ( WGC)

WGC-  China’s gold investment demand grew by 121% in 2Q- Central Banks buy more gold-

CONCLUSION: the WGC just reported its 2Q report ( see attached). Three key things:

 

1- ONE OF THE KEY NEW TRENDS IS CHINA WHERE RETAIL INVESTMENT DEMAND JUMPED BY 121% ( SEE PAGE 11). We continue to believe that deregulation of the gold market in China could OPEN a major new market for gold.

 

2- ANOTHER INTERESTING TREND IS THAT INDUSTRIAL DEMAND FOR GOLD CONTINUED TO IMPROVE BY 14% MAINLY DRIVEN BY ELECTRONICS UP 25% ( see page 10).

 

3- CENTRAL BANKS WERE NET PURCHASERS OF 7 TONNES OF GOLD DESPITE THE IMF SALE OF 47 TONNES DURING THE QUARTER. RUSSIA WAS AMONG THE LARGEST BUYERS ( 34 TONNES). The philippines also bought more gold.

 

Gold Demand Trends for Q2 2010 out (see Enclosed file), and WGC press release below>

  

 

INVESTMENT DEMAND WILL CONTINUE TO SUPPORT ROBUST GOLD MARKET DURING 2010

 

Demand for gold will remain robust during 2010 as a result of accelerating demand from India and China, as well as increasing global investment demand driven by continuing uncertainty over public debt and economic recovery, the World Gold Council ("WGC") said.

According to the WGC’s Gold Demand Trends report for Q2 2010, published today, demand for gold for the rest of 2010 will be underpinned by the following market forces:

* India and China will continue to provide the main thrust of overall growth in demand, particularly for gold jewellery, for the remainder of 2010.

* Retail investment will continue to be a substantial source of gold demand in Europe.

* Over the longer-term, demand for gold in China is expected to grow considerably. A report recently published by The People’s Bank of China and five other organisations to foster the development of the domestic gold market will add impetus to the growth in gold ownership among Chinese consumers.

* Electronics demand is likely to return to higher historic levels after the sector exhibited further signs of recovery, especially in the US and Japan.

 

Marcus Grubb, Managing Director, Investment at the WGC commented:

"Economic uncertainties and the ongoing search for less volatile and more diversified assets such as gold will underpin investment demand for gold in the immediate future. Further, in light of lingering concerns over public debt levels and the euro, European retail investor demand has increased significantly.

"Over the past quarter, demand for gold jewellery in key Asian markets has been challenged by rising local prices. Nevertheless, we are seeing a deceleration in the pace of decline in demand, providing a strong outlook for ongoing recovery in this crucial market segment."

 

 

GLOBAL DEMAND STATISTICS FOR Q2 2010

* Total gold demand1 in Q2 2010 rose by 36% to 1,050 tonnes, largely reflecting strong gold investment demand compared to the second quarter of 2009. In US$ value terms, demand increased 77% to $40.4 billion.

* Investment demand2 was the strongest performing segment during the second quarter, posting a rise of 118% to 534.4 tonnes compared with 245.4 tonnes in Q2 2009.

* The largest contribution to this rise came from the ETF segment of investment demand, which grew by 414% to 291.3 tonnes, the second highest quarter on * Physical gold bar demand, which largely covers the non-western markets, rose 29% from Q2 2009 to 96.3 tonnes.

Currencies The Race to the bottom


Currencies

Race to the bottom

A weak economy and an active Federal Reserve have driven the dollar down since June. Will that last?

THREE months ago, when Europe’s debt crisis had markets panicking about sovereign risk, it seemed that all roads led to the dollar. The greenback was rising against the other big global currencies, the yen, pound and euro. Its role as the world’s reserve currency seemed an inestimable advantage when investors were unsure where they could safely park their cash. Within the rich world, America’s economy looked the best of a bad bunch. The stage seemed set for a dollar rally.
How quickly things have changed. On August 11th the dollar fell to a 15-year low against the yen of ¥84.7. It perked up against the euro to $1.29, though that was still much weaker than the $1.19 it reached in early June when euro-revulsion was at its worst (see chart 1). The ground the greenback has lost in recent weeks owes to a run of weaker data about the economy, not least on jobs (see box on the next page). On August 10th the Federal Reserve conceded that the recovery would probably be slower than it had hoped. The Fed kept its main interest rate in a target range of 0-0.25% and stuck to its creed that rates would need to stay low for “an extended period”. In addition the central bank said that it would reinvest the proceeds from the maturing mortgage bonds it owns into government bonds to prevent its balance-sheet (and thus the stock of ready cash) from gradually shrinking.
This modest change in Fed policy was widely expected. It signalled concern about the economy while stopping short of panic measures. That did not stop stockmarkets from slumping the day after the Fed’s statement—perhaps because investors had hoped the central bank would go further and commit itself to a fresh round of asset purchases, or perhaps because they were unnerved by the Fed’s more cautious tone on the economy. But the Fed’s shift still seemed to confirm that it is more minded than other central banks to keep its monetary policy loose, a perception that has contributed to the dollar’s slide and helped America’s exporters. The day before the Fed’s decision, the Bank of Japan kept its monetary policy unchanged. The European Central Bank (ECB) has allowed short-term market interest rates to rise as it withdraws emergency liquidity support from the banking system.
Events in America do not determine the dollar’s fate: exchange rates have two sides. The euro has bounced back since June in part because markets are more confident that Europe has got to grips with its sovereign-debt problems. The currency’s strength also reflects a stronger economy. Figures due out after The Economist went to press were expected to show that the euro area’s GDP grew a bit faster than America’s in the second quarter, thanks largely to booming Germany. But the problem of sluggish growth in the euro zone’s periphery has not gone away. A strong euro amplifies the lack of export competitiveness in Italy, Spain, Greece and Portugal. That is one reason why many analysts think the euro is likely to weaken again.
The yen’s rally, in contrast, may have further to run. It is trading against the dollar at levels last seen in the aftermath of the peso crisis in the mid-1990s, when the yen had greater claim to being a haven from troubles elsewhere. But the yen’s renewed strength may not be quite as painful for Japan’s exporters as that implies. Years of falling prices in Japan combined with modest inflation elsewhere mean the real effective exchange rate is below its average since 1990 (see chart 2). Because Japan’s wages and prices have fallen relative to those in America and Europe, its exporters can live with a stronger nominal exchange rate.
What needs explaining, then, is not why the yen has strengthened recently but why it was so weak before. Kit Juckes of Société Générale reckons that the low yields on offer in Japan provide most of the answer. “The yen is under-owned because Japan had by far the lowest interest rates in the world,” he says. But now falling bond yields in America, as well as in most of Europe, have made Japan a less unattractive place for investors to put their money. The more that the rest of the rich world resembles Japan, the less reason there is to shun the yen. There are even stories that China has been buying Japanese bonds as part of its effort to diversify its currency reserves away from the dollar.
Such interest may not be entirely welcome in Japan. A cheap currency is especially prized now, when aggregate demand in the rich world is so scarce and exports to emerging markets seem the best hope of economic salvation. Japan’s finance minister has complained that the yen’s recent moves are “somewhat one-sided”. That kind of talk has spurred speculation that Japan’s authorities may soon intervene to contain the yen’s rise. But such action would spoil the rich world’s efforts to persuade China to let its currency appreciate. It is perhaps more likely that the Bank of Japan and the ECB will follow the Fed’s lead in extending (albeit modestly) its quantitative easing—or risk a rising exchange rate.
The battle for a cheap currency may eventually cause transatlantic (and transpacific) tension: not everyone can push down their exchange rates at once. For now, though, the dollar holds the cheap-money prize.