The dollar under pressure on the market

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With the return of confidence in financial markets, including the Bourse, it was expected that investors decide to diversify their portfolios again, which obviously had an impact on the dollar. Daily Forex News And Tips / Make Money by Learning

Thus, since the beginning of the week, the dollar was under pressure facing the European single currency. Besides the return of taste for risk which benefits the New Zealand dollar or the euro, the dollar was mainly affected by concerns about the ability of the U.S. economy to cope with the crisis. While the federal government, as he once again showed the rescue of the bank Citigroup, is willing to hand the portfolio to avoid a systemic risk. However, the problem is the fiscal capacity of the United States. Indeed, the slate of the Fed begins to grow dangerously so the concerns of traders are beginning to grow. Thus, unlike the plan Paulson, the plan presented this week by Ben Bernanke to help the real estate market and U.S. households was greeted with caution by the foreign exchange market.

However, it will just a press conference and some indicators that that had blown throughout the week to the euro from showing up not dropped. Indeed, the slowdown in inflation in the euro zone in November was echoed weekend to what Jean Claude Trichet explicitly announcing lower rate of the ECB at its meeting on 4 December. According to analysts, this monetary easing should be a priori between 0.75 and 1 percentage point.

In contrast, the dollar, although under pressure, successfully resists. Indeed, despite the accumulation of a black series this week on both the upward revision of the contraction of GDP in the third quarter as the decline in household spending and the fall in new home sales, the dollar remains well. Although confidence appears to be back on markets, traders have integrated the scenario of a recession on a scale unprecedented in industrialized countries, the decline in oil prices and repatriation of funds to the United States continue to play for the U.S. currency.

The other factor that plays for the U.S. currency is the ability for the moment the U.S. authorities to convince markets of their ability to overcome the crisis. Certainly, questions begin to arise in the funding of all plans announced but, unlike the EU, the United States can still raise this money. Indeed, the plan of 200 billion euros announced by the European Commission is pale figure, and more knowing that Germany opposes and the assumption of a reduction in VAT, if not coordinated, could not bear the expected fruit. In case of unbalanced trade balance, a country implementing a reduction in VAT may encourage consumption of imported goods.

Thus, ultimately, the issue of credibility arises again for the single European currency, which explains his inability to overtake the dollar as standart currency