Dollar Strong Despite Stock Markets

Despite the global financial crisis the dollar appears to be holding it’s own on world Forex markets. On Monday the dollar jumped against other currencies except the Japanese Yen. The Euro was at a 15 month low and bottomed at $1.3441 it’

s lowest level since 2007. The British Pound sank to $1.7388 down from $1.7781 a 4 percent drop and the lowest since 2006.

European Markets Fall

Stock markets in Europe fell due to the inability of European leaders to come up with a coordinated plan for Europe’

s troubled financial sector. A weekend long meeting of European leaders failed to produce tangible results. The 4 major European powers, Germany, France, Britain, and Italy called for more regulation but stopped short of advocating an American style bailout plan. Germany, Iceland, Denmark, Ireland, France, Greece, and Sweden all moved to guarantee bank deposits.

The actions were not enough to stop European markets from falling and investors were selling foreign positions and buying the dollar back. The uncertainty is caused by the all but frozen credit markets and because of government inaction the markets are likely to remain frozen for quite some time. Forex traders and investors have been busy trying to make sense of chaotic market conditions.

Dollar Surges

The dollar has surged 10% against the Australian dollar and 6% against the New Zealand dollar. Australian currency is down 20% for the year. The US dollar also hit its highest point against the Mexican Peso since 1993 trading at 11.8945. Volatility in currency markets have fx traders watching markets intently.

Dollar Gains in Forex Markets

Despite a dismal economy the dollar remains strong in Forex markets. It is estimated that the US dollar has gained 25% against the Euro since July 2008. Even with negative reports about the US economy and a falling stock market the dollar is holding its own and actually gaining against the Euro and other currencies. Some Forex traders explain this phenomenon by saying that in uncertain times global investors will flock to dollar backed assets. Despite the US economy the dollar is seen as a solid currency even in a bear market although many Forex traers have expressed concern about the ultimate future of he dollar.