Dollar Falls Against Majors

The US dollar fell against major currencies due to concerns about the automaker bailout and further weakness in the U.S. economy. The currency has hit a two-month low against a basket of major currencies, with the dollar falling to $1.3727 against the Euro, the weakest level since October 14. The dollar also dropped against the Yen to 90.50 after hitting a high of 88.10 on Friday. Forex traders have a busy week ahead as both the US and Eurozone countries release current economic figures.

Demand For US Assets Weakens

The U.S. Treasury reported Monday that international demand for long-term U.S. financial assets weakened in October as Forex traders dumped risky positions and are no longer interested in investing in the U.S. currency. Many economists have played down the uncertainty surrounding the fate of the automaker bailout which has undermined the dollar’

s strength.

White House May Divert Funds to Automakers

U.S officials said on Friday that the government was considering tapping a $700 billion financial industry bailout fund to prevent a collapse of beleaguered U.S. automakers. The White House has hinted that they may divert some of the $700 billion destined for the financial industry to the automakers. The market is reacting to the news and Forex traders report a weakened US dollar.

Recession Fears Affecting Markets

Markets fear that a bankruptcy of any of the ‘big 3’

automakers could prolong the current recession and have a domino effect on the US economy as a whole. Forex traders are waiting to see what effect rate cuts announced on Tuesday will have on the dollar. Many Forex traders do not expect a sudden recovery of the dollar.