The Dollar dropped against most of the major currencies during yesterday's trading session. The Dollar fell sharply vs. the Euro and the Pound, and the EUR/USD pair reached a weekly high of 1.3838.
Two main reasons led to the Dollar's depreciation today. The first reason was ongoing speculations that Greece's economy will be rescued. This has helped to correct some of the Euro's recent losses, and as a result it has weakened the Dollar. In addition, this optimism also boosted risk appetite, turning investors to look for higher yielding assets such as the Euro and the Pound. The second reason was a lower than expected Economic Optimism survey figures. The survey showed that U.S. citizens are pessimistic regarding their personal financial outlook and have less confidence in federal economic policies.
Looking ahead to today, many interesting economic publications are expected from the U.S. On 13:30 GMT the Trade Balance for December will be published. This report measured the difference in value between imported and exported goods and services during December. Analysts forecast the U.S. trade deficit has reduced from 36.4B to 35.8B during December. If this will indeed be the actual result, it is likely to strengthen the Dollar. Also today, at 15:00 GMT the Federal Reserve Chairman Ben Bernanke will testify before the House Financial Services Committee in Washington DC. Bernanke is intended to discuss the U.S. future monetary plans, and the market is likely to have an immediate response to his speech.