Dollar weighed down by concerns over US economy - Cost of war Iraq stands at $500 billion
The dollar slid broadly on Friday, hitting three-month lows against the euro and the Swiss franc as falling stocks, concerns about the US housing sector and implications for the wider economy shook sentiment. Markets were also concentrating on US data due later in the day, with any signs of weakness seen knocking confidence further and raising the prospect of a US interest rate cut, that would undermine the dollar’s yield advantage.
News on Thursday of a sharp rise in US producer prices but sluggish factory activity in the Northeast also weighed on the dollar, sending an early signal that the United States could be heading towards stagflation -- no growth but high inflation.
To make matters worse Business Week reported that after four years, America's cost for the war in Iraq has reached nearly $500 billion -- more than the total for the Korean War and nearly as much as 12 years in Vietnam, adjusting for inflation. The ultimate cost could reach $1 trillion or more.
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