- The dollar tumbled to a near 15-year low against sterling
yesterday on fresh signs of economic trouble in the United States.
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- An 8.3pc crash in US industrial orders and an admission
by the Federal Reserve chairman that Washington does not know how bad
housing really is set off another day of wild gyrations on the currency
markets.
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- The Federal Reserve chairman Ben Bernanke said Washington
did not know how bad a state the American housing market was in
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- US house prices fell 3.5pc to an average $221,000, the
third month of declines. Stocks of unsold homes rose to 7.4 months' supply,
the highest since 1993. The US consumer confidence index fell sharply
to 102.9.
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- The "truckers index" of tonnage shipped by
US haulage companies was down 1.8pc in October, a leading indicator of
contraction. Merrill Lynch called the fall "borderline recessionary".
-
- The dollar continued its slide against the euro, dropping
to $1.3194 after the Federal Reserve chairman, Ben Bernanke, said the
housing slump "would be a drag on economic growth into next year".
Mr Bernanke said official figures did not pick up the "sharp increase"
in cancellations on house deals and might understate the inventory glut.
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- "Any significant effect on consumer spending arising
from further weakness in housing would have important implications for
the economy," he said.
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- The pound briefly touched $1.95 and surged to eight-year
highs against the yen.
-
- The Japanese currency has been in freefall for months
on repeated weak data. It suffered a fresh blow yesterday after retail
sales fell for a second month, increasing fears that Japan's export- dependent
economy may slow in lock step with America.
-
- The OECD club of rich nations gave warning yesterday
in its bi- annual economic outlook that the world's second-biggest economy
was still too fragile after years of debt deflation to risk a rapid rise
in rates from 0.25pc.
-
- "The return to price stability is proving longer
and less assured than expected. Further monetary tightening should wait
until a fully-fledged exit from deflation finally materialises,"
it said.
-
- The OECD downgraded its global growth forecast for the
30 leading economies from 2.9pc to 2.5pc in 2007, and said the US might
need to start cutting interest rates next year.
-
- Chief economist Jean-Philippe Cotis said there was no
cause for alarm, arguing that the US would achieve the "soft-landing"
it eluded after the dotcom bubble in 2000. "What the world may be
facing is a rebalancing of growth," he said. "In the euro area,
recent hard data suggest that a solid upswing may be under way. Growth
should remain buoyant in China, India, Russia and other emerging economies."
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- In a rare piece of good news that helped calm Wall Street
after the equity rout on Monday, Mr Bernanke said inflation had been
"somewhat better behaved of late".
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- David Lereah, chief economist for the US National Association
of Realtors, said there might be light at the end of tunnel for the housing
market, citing a slight rise in transactions.
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