Dollar Recovers against the Pound and Euro
Posted on 19. Dec, 2008 by admin in USD Analysis, USD Economic Analysis, USD News
The U.S. currency experienced heavy volatility throughout yesterday’s trading session, and recovered some ground against the EUR after the U.S. markets opened. This was after a sharp decline in the Dollar since the start of the week, which saw a reduction in value of the greenback to as low as the 1.4716 mark reached yesterday. Against the JPY, the greenback also showed some recovery after the Japanese currency reached a 13-year high against the USD on Wednesday. The USD also recovered against the GBP yesterday, as the greenback increased nearly 500 pips against the cable to close at 1.5120.
The U.S. Stock market plunged at the end of the trading day, as the Dow Jones registered a fall of more than 200 points. This was largely due to investors continuing to digest the dramatic rate cut by the U.S. Federal Reserve from earlier this week. For some investors, the Fed’s measure that sent its Interest Rate to a record low range of 0-0.25% has helped to open credits for cash-strapped borrowers. However, for others, the measure has not produced the positive impact that some traders had hoped.
Important economic releases yesterday showed that Unemployment Claims eased, showing a decline of 21,000 from the previous week’s 26-year high of a revised 575,000 claims. This data reasserts that the economy is going through one of the worst economic crises since the Great Depression. The Philadelphia Fed Index, which is an indicator for regional manufacturing, and is seen as one of the first monthly indicators of the health of the U.S. manufacturing sector, was better than expected, which improved to -32.9 this month, from -39.3 in November.
Today, traders should pay close attention to the equity markets to determine how to continue with USD positions, as well as to the news coming out other global markets in order to place their transactions accordingly with today’s developments.
