Forex and Other Articles

Dollar at One Month High Against Euro

Dollar Advances Against Major Currencies

The dollar gained against a basket of currencies on Tuesday, hitting a one-month high against the Euro, buoyed by a sharp drop in the U.S. trade deficit in November. Investors braced for further rate cuts by the European Central Bank. For the last few months Forex markets have been especially volatile forcing traders and investors to consult their Forex converters almost hourly.

Dollar Demand Soars

Demand for the dollar soared as a US government report showed that the US trade deficit posted its biggest contraction in 12 years. Weak consumer demand and plummeting oil prices led to a record drop in imports. Kathy Lien, director of currency research at GFT Forex and a well respected expert stated, “The theme of the day is really a broad-based dollar rally. There are a number of reasons for that; the primary of which is the stronger trade balance number that we had this morning that renewed some optimism in the U.S. dollar.”

Euro Falls to New Low

The Euro fell to $1.32 against the dollar due to uncertainties about an expected interest rate cut by the ECB on Thursday. The threat of ratings downgrades of some European countries including Greece and Spain also put pressure on the Euro. Ms. Lien also stated, “The ECB will have to cut interest rates and that’s why the euro has been selling off quite aggressively since Friday.” This week’s market volatility is sure to have investors and traders consulting Forex converters often.

Global Currency Troubles

Because of Standard & Poor’s warning that it could downgrade the country’s foreign currency rating the New Zealand dollar fell more than 4 percent to a one-month low at US$0.5501. The bad news faced by New Zealand highlights the global nature of the economic crisis. The global economy is worsening and the International Monetary Fund is likely to cut its growth forecasts sharply.

ECB to Cut Rates

Many expect the European Central Bank to cut interest rates by 50 basis points on Thursday to 2.0 percent, or possibly more. Todd Elmer, currency strategist at Citigroup stated, “The slowdown in the euro area appears increasingly severe. The perception is policymakers are not doing enough.” The Euro Zone is perceived by many to be behind the curve in taking necessary action to stimulate the European economy.

Additional bad news came as Spain became the third euro zone country, along with Ireland and Greece, to be warned by Standard & Poors rating agency that its credit rating is under threat.

For Forex traders and investors the turmoil in currency markets requires a reliable accurate Forex converter. Consulting a Forex converter frequently will help investors to spot opportunities and take advantage of the many chances to realize a profit in volatile markets.

Tags: Currency Research, Demand Soars, Dollar Demand, Dollar Euro, Downgrades, Ecb, Economic Crisis, Euro Dollar, Foreign Currency, Forex Markets, Global Currency, Global Economy, Global Nature, International Monetary Fund, Market Volatility, New Zealand Dollar, S Market, Trade Balance, Us Government Report, Us Trade Deficit