IMF and Eurozone Chiefs Say Euro Overvalued

For a short time the euro hit $1.51 despite warnings from Eurozone finance chiefs that the currency is ‘overvalued.’ In early trading in London the euro hit 1.5109 and fell later to 1.5099. The IMF and some Eurozone finance ministers view the euro as too overpriced according to Eurogroup leader Jean-Claude Juncker. Jean-Claude Juncker made the comments after a meeting of the Eurozone nations that was also attended by the IMF’s European director Marek Belka. Juncker stated, “We are in agreement with him when he says that the euro is overvalued and that a certain number of adjustments are desirable.” The European Commission predicts Eurozone growth of 0.7% for 2010 and 1.5% in 2011. At the present time the 27-nation EU as a whole reports that 22.51 million people are unemployed.

BOJ to Keep Rates Low

The Bank of Japan which is under pressure to boost the troubled Japanese economy said it will inject more than $100 billion dollars into the Japanese financial system. The central bank said it would keep rates at 0.1% and would push 10 trillion yen ($114 billion USD) into the financial system. Gold hit record highs and on the London Bullion Market gold rose from $1,192.50 on Tuesday to $1,214.13 per ounce on Wednesday.

Further Dollar Decline Predicted

Some analysts predict a further dollar decline after US home sales unexpectedly rose and Dubai World said that talks with creditors are ‘constructive.’ The dollar fell for the second straight day against the euro as US and European stocks rose. The US dollar fell for the fifth straight month losing 1.9% in November. The Canadian dollar gained on rising gold and oil prices and is now at a six week high against the US dollar. The Canadian dollar rose 1.5% to C$1.0406. Traders and investors are waiting for the US non farm payrolls report due Friday. Worse than expected results could trigger a bout of risk aversion.