Bank Stress Test May Suppress USD
May 4th, 2009 Posted in Chief Analyst Special Report, Daily Forex News
A deeper look into forex market activity since Friday indicates two primary forces driving the USD in today’s early trading hours. The first is news that the recent bank stress test results will be published later this week, the second is the continuation of the swine flu epidemic of fear that has apparently gripped the attention of many investors. Losing ground against most of the major currency counterparts, the USD could potentially dig itself deeper in the hole in the coming weeks.
After the market opened for today’s early trading session, the USD apparently dropped towards 1.3330 against the EUR and as low as 1.4960 against the Pound Sterling, breaking last week’s low against that pair. As many analysts are anticipating results from the bank stress test to show that the USD is not as safe an investment as many think, traders could see a sudden flight from the greenback in the coming weeks as banks attempt to determine its true value. Just how low will the Dollar drop in such a situation?
Considering that much of the economic data being released from the United States has been relatively positive, it seems strange that an out-flux from the USD will occur, but if market forecasters foresee doom in the Dollar’s future, the predictions of a 1.4500 mark against the EUR and 1.5100 mark against the Pound, may very well be reached in the weeks ahead. Other data, if it continues to show positive results, may also signal a flight from the forex market in exchange for the higher yielding assets of the stock markets, thus resulting in further depreciation in common safe-havens such as the greenback.
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Tags: Bank stress test, economics, Forex Strategies, stress test, trading strategies, U.S economy, USD, USD forecast
