“The dollar fell to a record low against the euro on Tuesday as data showing sharply weaker capital flows prompted new fears over the funding of the US current account deficit.
Treasury figures showed net capital inflows into the US fell from about $50bn (E42bn) in August to $4.2bn in September, the lowest since the near-collapse and bail-out of the Long Term Capital Management hedge fund rattled markets in 1998.
The euro rose two cents to $1.1953 against the dollar, beating its previous lifetime high of $1.1933, set in May.
The data raised fears that the US may have difficulties funding its current account deficit, which ran at about $46bn a month in the first half of the year.
‘The September data is the strongest evidence to date that the record US current account deficit has become too large to finance through the net foreign investment into US securities, and is thus contributing to the long-term decline in the US dollar,’ said Michael Woolfolk, senior currency strategist at the Bank of New York.”
It just might be a good time to own gold and Euros.