The Euro rises to the top like cream in hot tea and the U.S. Dollar drops like a lump to the bottom despite Paulson’s pep talk.

Though all the countries in the Eurozone reported poor economic expectations for Q4, the Euro is trading near all time highs, and ended today on the upside. The U.S. Dollar did not fare so well in response to data released early this morning. The negative numbers from international capital flows and capacity utilization dragged the Dollar down. Even reassurance about the stability of the Dollar from the Treasury Secretary did not help the U.S. currency, as it ended lower in today’s trading. The U.S. Dollar fell against 15 of the 16 most traded currencies. The Japanese Yen also realized losses come the end of the session. Overnight, the Yen strengthened with the weakening Asian markets and the desire to move out of relatively risky carry trades funded by cheap borrowing in the Japanese currency. A switch was made in the day traffic, with the Yen being the only currency against which the U.S. Dollar gained.

Three numbers were released this morning; however they did not seem to have a large or unexpected impact on the markets. Monthly international capital flows dropped by $14.7 billion in September, the second consecutive drop following the credit and financial market crisis. This really is a very telling trend. Industrial production went against the recent uptrend, reporting a decline for the first time in five months. The 0.5 percent drop was off from the expectation of a 0.1 percent rise. Plant Capacity Utilization also surprised investors, coming out at 81.7 percent, lower than the prior month’s 82.2 and the expectation of 82.0. Poor automotive sales contributed to the losses, along with utility output, and a drop in overall manufacturing.

Fed Governor Randall Kroszner and Treasury Secretary Henry Paulson both gave speeches this morning. Kroszner stuck with Bernanke’s decision to keep rates as is, despite a faltering economy. He also recognized that though some positive changes resulted from earlier rate cut actions by the Fed, another rate cut would not be beneficial. Paulson, meanwhile, was busy trying to convince the world that the Dollar is in recovery mode and will continue to gain ground. A meeting held in Cape Town allowed him the platform to convince Treasury departments across the globe to reinforce the U.S. Dollar as the world’s currency.

The President of the Atlanta Federal Reserve Bank, Dennis Lockhart, also spoke this morning. Lockhart expressed concern that the south was beginning to feel the burn of a weakening housing market. Though he did not comment on the standing of the overall economy of the U.S., Lockhart did touch on a subject affecting him directly. Lockhart made it clear he had complete faith that the southeastern U.S. is more than capable of overcoming these obstacles.

This report may include information garnered from the following sources: CBOT, Bloomberg, Reuters, Interactive Investor, Cattle Network, Earth Times, AgReport, Aol Money, CNN Money, Market Watch, The Forex Market, Yahoo Finance, FXsol, Financial Times, iWon, Report on Business, Crain’s, Dow Jones Newswire, Nasdaq News, INO News, The Hightower Report.

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