The dollar continued to plunge across the boarder today as the spreading of the financial crisis led to JPM.N acquiring the Bear Stearns Bank provoking fears that more financial firms could become victims. The Feds took more emergency measures to ease the fast spreading financial crisis cutting its discount rate on Sunday and opening up discount window lending to major investment banks.
The dollar is suffering from almost perfect negative factors; that are a worsening financial crisis that seems to be everlasting, an unusual aggressive Fed rate cuts and investors branch out away from the UK currency.
The US Feds took new fresh steps to stem the financial credit crisis and equities markets. This was done in an extraordinary move where the Feds cut its primary discount rate by 25 basis points to 3.25 points forcing the dollar to weaken furthermore against the Euro pushing the pair to the upside to fetch a high of 1.5903. However, despite the dollar weakness against major currencies, it stood a chance with the royal pound inkling against it. The GBP/USD pair is now trading towards the downside to record a low of 2.0099.
The fears about the damage from the credit market and the continuing of slashing interest rates pushed the dollar to an extreme downward trend allowing the Japanese Yen to absorb further gains pushing the pair to record at this hour a low of 95.80 after recoding a high of 98.17. Solo intervention by Japan seems difficult yet Japanese authorities are concerned about such gains as it could hurt Japanese exports.
Many market participants are now hoping US authorities will eventually use public funds to help stabilize stumbling credit markets as they believe that lowering interest rates and injecting extra funds in the market cannot fix the given problems
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