Monday, 7 Mar 2011

Dollar Corrects Losses as Oil Prices Decline

The U.S. dollar saw a very volatile trading session on Monday. The dollar began this week's session with a falling trend against most of its major currently rivals, and the EUR/USD reached a 4-month high at the rate of 1.4035. However, as the trading day proceeded, the dollar managed to correct its losses against most of the major currencies.

The dollar fell against the euro as news of a possible euro zone interest rate hike next month continues to draw investors to the 17-nation currency. However, by noon-trading the dollar managed to erase all of its losses after oil prices eased back from almost $107 barrel. Crude oil is currently trading below $105 a barrel.

Looking ahead to tomorrow, the most significant economic release looks to be the Canadian Housing Starts report. If the end result will beat forecast, the CAD is likely to be supported. Traders should also continue to follow the unrest in the Middle-East as any news update from the region is likely to have an immense impact on the market.