Dollar Remains Strong

2008 has been a very busy year for Forex traders and 2009 promises to be just as volatile. The global financial crisis saw Forex traders and investors scrambling for the safe haven that the US dollar provided throughout the crisis. Despite dismal economic news from the US the dollar remained strong.

Euro Declines

The Euro neither did not fare as well although it made modest gains in November. Last week the Euro declined against the dollar for the first time amid speculation that the European Central Bank will lower rates reducing the Euros appeal for Forex traders. Boris Schlossberg, director of currency research in New York at GFT Forex, stated, “The pressure on the ECB to begin to lower rates below the 2 percent level is going to be immense, once that occurs, the pressure on the euro is really going to take shape.”

The British pound which has had a miserable year came within 2 pence of parity with the Euro last week and experienced a seven year low against the dollar. Economists expect the recession to deepen in the UK.

Dollar Rises Against Yen

The dollar rose to a three week high against the Yen caused by a rally in the stock market and an increase in Treasury yields from record lows. The euro fell 1.3 percent to $1.3855 yesterday, down from $1.4028 on Dec. 26. The dollar rose 1.6 percent to 92.28 yen from 90.81.

New Administration and Effect on the Dollar

On January 20^th a new administration will take over the reins of power in Washington. How the new administration and its policies will affect the dollar is anybody’s guess and Forex traders will be watching closely. It is hoped that the global recession will be resolved and markets will return to some semblance of stability.