Due to a number of factors in recent months, the American dollar has been entering a slump. It was reported that on Wednesday the US currency reached an eight-month low.
The dollar also hit a two year low against the euro and it is now valued at $1.379 versus its previous high in November 2011 at $1.377.
This has confirmed for many analysts that the Federal Reserve Bank will not be able to begin reducing its purchases which are pumping money into the US economy. This information has yet to be confirmed by the Federal Reserve itself.
The Foreign Exchange Strategist at the Bank of Singapore believes that this isn’t rock bottom for the dollar yet at it will continue to slide. He adds that the euro may rise even further to reach $1.39.
The Japanese Yen also made a positive turn at 97.89 yen to $1 US.
Employment A Main Factor
The government shut down has delayed cost the US economy large sums of money per day but it turns out that it is not the only reason for the sinking dollar.
The United States Department of Labor released their monthly report on employment rates in the nation and it was not the improvement the Fed was hoping for.
Job creation numbers for the month of September were well below expectations of 180,000. Last month less than 150,000 jobs were created. This shows that employers are not doing well enough to hire more staff. The total number of unemployed individuals in the United States surpasses 11 million.
Although the rate of unemployment is declining, it is largely due to the fact that much of the work force is entering their retirement and no longer working. This means that the number of people looking for work has been declining rather than more people finding jobs.
The unemployment between July and August of 2013 only shifted by approximately 0.04%. These numbers did not impress the Fed and so many feel that they will not halt their purchases until, at least, mid-March 2014.
Although this news has negatively affected the worth of the dollar, it has caused other currencies around the world to sky rocket.