WEAKER U.S. DOLLAR POSES PROBLEMS FOR EUROPE

The AP reports that the euro reached an all new high late yesterday (Sept. 11), while the US dollar dropped to an all time low. The sudden surge came after Treasury Secretary Henry Paulson told several financial firms in the US that volatility in financial markets will take some time to be resolved, particularly in the area of subprime mortgages. Paulson’s report has now strengthened speculation that the Feds will cut interest rates at a meeting next week, which would further weaken the dollar.

A strong euro means European exports are more expensive in the US – and that goes for French, Italian and German wine. At the same time, a weaker US dollar makes exports more competitive, but also makes things more expensive for American tourists in Europe.