Friday, 29 Oct 2010

Dollar Continues to Slide

The U.S. dollar extended losses against most of its major currency pairs on Friday amid expectations the Federal Reserve will engage in a new round of monetary policy easing next week. The Dollar is currently trading lower against the GBP by nearly 100 pips at 1.6025. It is also trading lower against EUR and JPY.

The Fed has telegraphed its intent to boost growth by pumping more money into the economy through direct government bond purchases. The only uncertainty is how much money the Fed is willing to spend.

As the U.S. market comes to a close, the USD may continue to weaken further, as forex traders feel that the USD is a risky bet for today. As a result, a fear about the Dollar's instability has led gold to rise over $15 an ounce. If today's trend continues, then the USD may be in for a bumpy week as a sell-off of the Dollar may hit full-force.