Despite a stream of bad economic news the dollar has been on a bearish move this week, the question is why? Accordingly to analysts, markets are behaving in an odd manner lately with all the uncertainty surrounding which confuses the direction in which the market is heading in the eyes of traders. So when traders have no clue to why the market is behaving as such, the trend usually prolongs.
The Euro and the pound fell against the dollar yesterday after the ECB held interest rates steady and the BOE trimmed them as it was widely expected referring to growth concerns. However, analysts detected a change in the tone of Mr. Trichet who had previously warned about the need for a high in rates to fight inflation. Comments made by him stressed on uncertainty clouding economic growth and the risks of a downturn in the Euro zone economy.
Concerns about the economic growth forced the Euro and sterling pound to sell off aggressively. The Euro continues to drop against the US dollar as of this moment amid weak economic data to fetch a low of 1.4450 after recording a high of 1.4498. Yet similar to the Euro, the sterling pound is also dropping against the dollar dragging the pair with it to record a low of 1.9402 after recording a high of 1.9509
The dollar moved narrowly against the yen ahead of G7 meeting where market players are waiting to grasp clues on the current situation. Consequently, the USD/JPY pair moved to the downside recording at this hour a low of 107.15 after recording a high of 107.72
The focus of the market is now likely to switch to a meeting held during the weekend of world finance chiefs in Tokyo where recent financial market turmoil and fears of a global economic turmoil are set to top the agenda. Also ending today speeches by the Fed rate Setters may give insight into how much further the US central bank is wiling to cut rates
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