Wednesday, May 2, 2012

US Dollar Weakens, Driven by More Than Just Risk on Trade

It's up, it's down. Where it will stop, no one seems to know.

The US Dollar has come under some intensified pressure in recent sessions, and the across the board underperformance in the buck suggests that there could be more at play than simply risk on market drivers. While there has been clear evidence of a resumption of risk buying over the past several sessions, which can be attributed to some of the weakness in the Greenback, we would also suggest that market participants are once again looking at the Fed and seeing a central bank that is not necessarily as ready to look to reverse policy as some may have thought. A couple of weeks back the possibility for another round of quantitative easing seemed like it had come off the table, but the latest FOMC meeting has not ruled out the possibility and we suspect that this could be the source of an acceleration in US Dollar selling.

» US Dollar Weakness Driven by More Than Just Risk On Trade »

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Breaking US Dollar Collapse News

What's Behind the Decline of the US Dollar?

This is one the of the best and simplest explanations we have seen:
The U.S. dollar's downward slide is accelerating as low interest rates, inflation concerns and the massive federal budget deficit undermine the currency. - Wall Street Journal, April 23, 2011
Interestingly, the Federal Reserve is responsible for, or an active participant in all three of these factors.