Thursday, 19 Nov 2009

Dollar's Gains Against the Euro May Be Short Lived

The Euro fell against both the U.S. Dollar and Yen in trading today due to a weak American stock market. While a poor performance on Wall Street usually means good things for the dollar, analysts agreed that with little other good news for the greenback, its gains would be short lived. The dollar also fell against the yen in early trading today, but as it is predicted that the Japanese government will soon declare its economy to be in deflation, the pair will likely reverse directions in the near future.

Traders should be looking at one major news event today that will indicate the strength of the American recovery as well as the dollar. At 13:30 GMT, the weekly unemployment claims number will be released. If the forecasted number of 503K is indeed true, the number would indicate a modest increase in the number of claims from last week. Consequently, the stock market could under perform, and modestly drive up the value of the dollar. If the number comes in below last week's figure of 502K, this could lead to a rally on Wall Street, thereby hurting the dollar further.