Excerpt from: GFT News
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| May 22, 2008 | | Greenback down in forex trading | The US dollar is falling again in currency trading on the FX market -- and rather rapidly. Pressure is coming to bear on the greenback in forex trading as oil prices continue to rise. Indeed, after breaching $30 per barrel yesterday, they have reached $35 per barrel this morning.
Oil prices weigh on the US dollar, since they often move inversely to the greenback. But with speculators driving up the cost of oil -- and future expectations of a supply crunch due to the expansion of developing nations -- it does not seem that there will be much price relief to help the US dollar anytime soon.
In addition to rising oil prices, the Fed has released forecast in which growth is expected to slow, but inflation is expected to rise. This stagflation could also take its toll on the US dollar as consumers have a difficult time keeping the economy running.
Over the last couple of weeks, the US dollar had been enjoying something of a rally. But that has changed. The British pound is making a comeback and the German Ifo report has given a boost to the euro in forex trading. Plus, rumors that US officials were leaning on other countries to keep their reserves in greenbacks in order to support the currency had contributed to a belief of a "strong dollar policy." Now, though, it appears those efforts may not be enough.
  | Topic Tags: currency trading, currency trading FX market, euro forex trading, forex trading, greenback forex trading, oil prices, stagflation, US dollar, US dollar currency trading | |
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