Quiet Trading Election Day
On November 
4th (Election Day in the US) the US dollar was trading steady in quiet trading by Forex traders and investors. Investors and Forex traders were eagerly awaiting the results of the historic 2008 presidential elections. Despite the state of the US economy and fears of a recession the dollar has been holding steady as investors and Forex traders seek a safe haven.
Investors and Forex Traders Shifting Money to the Dollar
The Euro declined against the dollar and the yen and the European Central Bank cut rates from 3.75 to 3.25 in an attempt to help the seriously deteriorating European economy. Central banks around the globe have lowered interest rates to try to mitigate the effects of the worst economic crisis since the great depression of the 1930’
s. One anonymous Japanese trader stated; “Investors have little choice but to shift their money to the dollar as data has almost confirmed that key European economies are heading into a recession. Deep troubles in countries surrounding the euro zone are also making the euro vulnerable against the dollar.”
The dollar index, which measures the U.S. currency’s value against six major currencies fell 0.1 percent to 86.36 after a two and a half year high of 87.88 reached last week. The euro fell 0.2 percent from late U.S. trade to $1.2617. Lingering doubts about financial markets and the world economy prompted investors and Forex traders to reduce risk and seek safety in dollar denominated assets.
Bank of Japan Cuts Rates
In its first rate cut in seven years the Bank of Japan lowered interest rates to 0.3 percent from 0.5 percent. There was more bad news for the Euro as the euro fell 0.5 percent against the yen to 124.68 yen. Many Asian economists and Forex traders expressed a wish for an Obama victory stating that a change in ruling parties will likely be better for world markets. Said Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp; “The deterioration of the U.S. economy will be a bit slower if Obama wins, as a change in the ruling party is likely to help Americans become more hopeful for the future.”
Forex Traders and Investors Watching the US
Forex traders and investors are watching the US election with an intensity not seen in years. A new leader in the US means a new direction including economic and monetary policies. In the meantime Forex traders are taking advantage of the opportunities that a strong dollar offers.
