US Dollar Falls

The US dollar fell (Dec. 2, 2008) against the Euro, Pound, and Yen as stock rose and investors waited for expected rate cuts by European central banks. Forex traders and investors are watching Forex markets closely as the dollar falls.

Strong Markets Hurt Dollar

Steve Malyon, currency strategist with Scotia Capital stated, “On days when people are little bit more optimistic in the equity market and about the economy in general, that tends to hurt the U.S. dollar.” The Dow Jones Industrial Average gained 3.3% in early trading, the Standard and Poor’

s gained 4%, while the NASDAQ rose 3.7%.

Traditionally risk adverse Forex traders and investors seek the security of the US dollar when times are bad but when stock markets perform well risk aversion eases and the dollar falls on currency markets.

Dollar Falls Against Major Currencies

The dollar fell slightly against the Euro from $1.2646 to $1.2704. The dollar also slid against the British Pound from $1.4884 to $1.4890. Against the Yen the dollar fell ¥93.10 to ¥93.212. The dollar is trading in a narrow range as investors and Forex traders anticipate expected rate cuts by European banks.

Forex Traders Watching Markets Closely

In the meantime Forex traders and investors are watching Forex markets closely to see what affect the expected rate cuts will have on the Euro and the Pound. Given the state of the global economy they have their work cut out for them.