Excerpt from: GFT News
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| February 06, 2009 | | Optimism about the economic stimulus bill sends greenback lower in forex trading |
The U.S. dollar appears to be pulling back from its recent strength in currency trading on the FX market. One of the main reasons that demand for the greenback is waning in forex trading has to do with its popularity as a safe haven currency.
One of the side effects of the global recession (including the economic troubles in the U.S.) has been that traders have been demanding greenbacks as a stable, safe haven currency. Even as news about the U.S. economy continued to worsen, the dollar gained ground as traders sought to protect what they could.
Now, though, there is some optimism that the current economic stimulus bill, with its massive spending and measures designed to get Americans spending money again, will actually accomplish its goals and get the U.S. economy moving again. This should bring focus back to the underlying fundamentals of the economy, highlighting U.S. government debt, as well as increasing risk appetite for other currencies.
Another interesting side effect: As probable inflation sets in, this could means that the interesting (and unusual) congruence between the U.S. dollar and gold prices may be ended -- restoring the dollar-gold relationship to one of opposite movement. Additionally, it is possible that the relationship between the U.S. dollar and the stock market may mellow as well.
| Topic Tags: currency trading, dollar safe haven, economy, forex trading, gold U.S. dollar, greenback forex trading, recession, safe haven currency, U.S. dollar | |
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