Lehman Brother cautioned on Monday that accounting changes could force Fannie Mae and Freddie Mac to raise capital at a difficult time. Both
Shares plunged, dragging US financial shares and the broader stock market down.
The Dollar got some support from comments by San Francisco Federal Reserve Bank President Janet Yellen that inflation was starting to outweigh the risk of a deteriorating US economy. Yellen's remarks indicated that the Fed could be leaning toward raising interest rates.
Such a step would help narrow the interest rate differential between the Dollar and the Euro, in the wake of the European Central Bank's 25bp rate hike to 4.25% last Thursday.
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