U.S. Auto Bailout a Blessing and a Curse; Will the Dollar Recover?
Posted on 22. Dec, 2008 by admin in USD Analysis, USD Economic Analysis, USD News
Things are looking down for the U.S. automotive industry as the proclaimed bailout has now been considered a delay for the inevitable rather than disaster prevention. While not certain, of course, the prediction by many analysts that the 3 auto giants (GM, Chrysler, and Ford) may in fact still face significant problems despite receiving bailout funds has helped weaken the strengthening position of the USD over the weekend.
Ending last week’s trading around the 1.4000 level against the EUR, the USD actually made strong gains after spiking up to the 1.4600 level around Thursday afternoon. After news that the auto bailout had been passed, traders began buying heavily back into the USD; however, as forecasters began claiming that an auto bailout wasn’t enough to save these companies, skepticism in the Dollar returned. At the start of today’s trading, the greenback began rising slowly back towards the 1.4100 price level, but now it currently sits just under 1.4000 against the EUR, and near the 1.5000 level against the GBP.
Oddly enough, many economists believe the Dollar was highly over-sold last week and is currently positioned to regain all it lost and potentially even strengthen more in the coming months.
This week, however, traders may expect less volatility in the USD as the Christmas holiday approaches and traders leave the market to be with their loved ones. No economic news will be released today, but important housing data will be released tomorrow and lend some insight into what’s happening with the American economy after this weekend’s bailout news. Will the Dollar get its second wind?
