Dollar down on bailout doubts

The dollar was down against the euro on Wednesday on speculation that the U.S government bailout of toxic mortgage-relation assets would not be as effective as first hoped. Fed Chairman Bernanke and Treasury Secretary Paulson gave more details on Tuesday about the proposed $700 billion rescue package which ran into stiff opposition from Congressional leaders. However the greenback strengthened against the yen as Warren Buffet’s Berkshire Hathaway Inc announced they were to invest $5 billion in U.S investment bank Goldman Sachs. The USD/JPY was trading at 106.14 at 9.15am GMT

Meanwhile in London the pound was little changed against both the euro and dollar before a report out today by the Confederation of British Industry. The so-called CBI realised sales figures are expected to be slightly better than last month’s 25- year low. ``The outlook for the U.K. consumer is bleak at the moment,'' said a London-based senior European strategist. ``This is going to be sterling negative.'' Sterling was trading at 1.8563 against the dollar at 9.06 am GMT

In Europe a report out Wednesday showed that Germany’s business confidence fell more than expected. The strongest economy in the Eurozone posted the worst results in more than 3 years in September. The Ifo institute’s business index, based on a survey of 7000 executives fell to 92.9 from 94.8 last month. The EUR/USD was higher as investors were more concerned with the upcoming meeting of Congress in the States. There is concern over the effect the $700 billion bailout will have on the US taxpayer and the value of the dollar. The EUR/USD was trading at 1.4677 at 9.06am GMT

Eyes will be on the vote in Congress, which could be held as early as today, to see if the bill will be successful .Longer-term prospects for the US currency remain uncertain as last week’s bullish sentiment has abated. Investors will be looking to the August existing home sales figures out on Wednesday. We could see negative pressure on the dollar if the data is worse than expected.

Today's Economic Events