Dollar Falls Against Major Currencies

The US dollar fell against other major currencies on Friday as Forex traders reacted to massive US job losses. The US shed 648,000 jobs in February pushing unemployment to a 25 year high. Forex traders also reacted to rumors that job losses were more in the 1 million range and this put pressure on the US dollar.

Dollar Still Reserve Currency

In the past the dollar has benefited from bad news and its status as the world’s reserve currency and safe haven has benefited the dollar throughout the global recession. Michael Klawitter of Dresdner Kleinwort in Frankfurt said, “Does this move mean we’re in a clear trend once again, which is moving against the dollar? I would be cautious.” On Friday the dollar index had fallen 0.9% to 88.295 .DXY and there was a piece of rare good news for the Euro which rose 0.8% to $1.2665.

Swiss Franc Gains

The Swiss Franc gained broadly and many forex traders saw the Swiss Franc returning to its safe haven status. The dollar fell against the Swiss Franc by 1.1% and traded at 1.1557. The Euro also fell against the franc to 1.4643 francs a loss of 0.4%. Forex traders also reacted to statements made by a top International Monetary Fund official stating that the world’s developed economies were in the worst decline since World War Two.

Dollar Safe Haven to Return

Many analysts and Forex traders believe that global economic concerns and the worsening situation in Eastern Europe would eventually bolster the US dollar again. Chris Turner of ING in London stated, “The market had been expecting that big rate cuts from the European Central Bank and the Bank of England would provide the catalyst for the euro to break new lows against the dollar, but when that did not happen investors reversed their long positions.”

Rate Cuts by ECB and BOE

Forex traders also noted rate cuts by the ECB and BOE who cut rates by 1.5% and 0.5 respectively. The BOE also announced that it would take unconventional measures to increase the money supply. Last week was a very busy one for Forex traders as several countries released economic data. Forex markets quickly reacted to every piece of news keeping Forex traders on their toes.