Worry over the Dollar’s credit rating

Monday, November 23, 2009

Forex Investors continued to downsize their risk holdings as stocks and commodities slid again while the Dollar reaped the benefits for a second straight session. Many see this as an overdue bounce for the Dollar which has been down close to 15% since the first quarter of 2009.

As worry over the Dollar’s credit rating as well as rising deficits and national debt in the US sparked a flight from the Dollar, other investments such as oil and Gold, which recently hit an all time high.

As the year winds down analysts expect profit taking from the 9 month boom of alternative investments to continue. This would spell good news for the Greenback.

At the close the Dollar was up 1.1% to the Euro to 1.4859, up 1.22% versus the British Pound, up .33% to the Canadian Dollar to 1.0704, up .14% against the Australian Dollar to .9144 and up .19% to the Swiss Franc to 1.0175.

The Dollar did fall 1.14% against the Japanese Yen signalling that the interest in the Dollar’s resurgence is not as stable as people would like right now.

The ICE Futures US Dollar index, a non-traded indicator which measures the USD’s performance against six major currencies, was up on the day at above 75, well above a 15-month low of 74.679 which it fell to earlier in the week.

The jump was due however to what traders call a “faulty trade” which saw a double in average daily volume after the contract sold off at 76.50, a number never reached. This sparked a wave of limit orders which were cancelled upon clearing after the session.


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