Dollar Gains Against Euro
On Monday (March 30) the dollar gained against the Euro as weak stock market performance and last weeks comments about European fiscal responsibility dampened investor confidence. During the past two weeks improved risk sentiment had benefited the Euro and other higher yielding currencies such as the Aussie Dollar and the New Zealand dollar.
Investors Seek Safe Haven
On Friday the Euro posted its biggest daily decline against the US dollar after the German Finance Minister said that the Euro could face major problems if Euro Zone states do not take the Euro Zone Fiscal Responsibility Pact seriously. Forex traders and investors reacted and the Euro fell on global currency exchanges. These factors combined with a Wall Street drop and falling bank shares sent forex traders and investors to the safe haven of the US dollar. Mitul Kotecha of Calyon in Hong Kong stated, “This rosy improvement that we’ve been seeing seems to be at least being re-thought for now and that’s come to the benefit of the dollar.”
Declining Euro Zone Industrial Orders
The Euro declined another 0.2% to $1.3260 after losing 1.5% on Friday as forex investors remained skittish after lower than predicted Euro Zone Euro Zone industrial orders and German inflation data caused market reactions. The Aussie dollar declined 1% and the New Zealand dollar fell 1.3%.
ECB Meets Thursday
The European Central Bank meets Thursday to review rates and is expected to drop rates to a record low of 1%. Forex traders and investors will be watching the ECB to see if it takes actions similar to the US Federal Reserve. Sue Trinh of RBC Capital Markets in Sydney stated, “The market will be on high alert for any comments that the ECB may be moving further into the realm of unorthodox monetary policy.”
G 20 To Meet
The G 20 nations will meet on Thursday and forex traders will be watching the summit with great interest to see what measures will be adopted to address the global recession. This week is sure to be an active one for Forex traders.
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