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September 6th 2005

USD firms as hurricane recovery begins

It seems the worst of Hurricane Katrina is finally behind us. The cleanup effort is underway, and the gulf region has achieved relative stability. Investors’ concern that higher energy prices would weigh on the US economy were allayed, as oil producers around the world released inventories in order to prevent the price of oil from spiraling out of control. Investors have also priced rate hikes back into interest rate futures, whereas before there was some uncertainty as to whether the Fed would continue raising interest rates in the wake of the hurricane. The renewed optimism in the American economy has buoyed the USD, which rose from a 3-month low. The Financial Times reports:

“Therefore, with oil prices now back below the levels seen before the hurricane hit and the relief work in the affected areas seemingly becoming more effective, we believe that the Fed will continue hiking rates for now.”

Read More: Data and disaster relief lift the dollar

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Posted by Adam Kritzer | in US Dollar | No Comments »

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