Tuesday, 30 Jun 2009

Dollar Surges on Poor Economic Data

Ahead of the U.S. market closing, the forex market has experienced an action-packed day. The most obvious behavior that we have seen today is a strong Dollar and weak GBP. The Dollar has risen against the majors today due to weak consumer confidence and mortgage figures. This also led to a drop in U.S. and global stock markets. This behavior is completely opposite to what we saw in the forex market yesterday.

The USD is currently trading higher by about 90 pips vs. the EUR at 1.4023. The greenback is also trading higher against the GBP and JPY too. The Dollar's behavior today marks a correction to yesterday's bearish USD. Additionally, investors are returning to the greenback as the U.S., and leading industrialized nations, such as Britain and Japan released dismal economic figures today.

Looking ahead to late trading, the Dollar gains against the Pound may extend if traders realized that the GBP may is currently overvalued, as a Pound crisis looms due to Britain's troubling economic crisis. This stems from spiraling deficit and the risk of Britain losing her AAA debt rating status. If this turns out to be the case, we may see the GBP/USD cross close below the 1.6430 level by the end of trading today. In the meantime, it may be wise to take advantage of the strong Dollar, and pull-in some profits.