Panic over the state of the US economy pushed the dollar to a 15-year low against major currencies yesterday. The drop came on larger-than-expected July payroll declines, data one analyst called “simply horrific.” Many fear that the credit crunch will drive down consumer spending, igniting a recession. Investors accordingly increased bets that the Fed will drop rates, Reuters reports.
The yen was the big winner against the dollar, at one point up 2%, while the euro rose 0.5%. Initially the credit crisis had been good news for US currency, as investors turned to cash and bonds over riskier investments. But scarce liquidity and disappointing housing and unemployment figures spelled trouble for the greenback this week