Tuesday, 7 Jul 2009

Dollar Extends its Gains Ahead of Wednesday's G8 Meeting

The Dollar continued to extend its early gains so today against most of its major currency pairs, par the JPY. This behavior is owed to fears growing over the prolongation of the current financial crisis. Speculation has continued today over the potential drawbacks of holding onto the GBP or EUR. Thus the USD and JPY continue to benefit from their safe-haven status, as the global economic situation continues to destabilize.

The GBP/USD pair slid by 130 pips today to 1.6150, as Britain released very disappointing Manufacturing Production figures earlier today. The EUR/USD pair fell 30 pips to 1.3945, as traders flocked to the safe-haven Dollar. The JPY rose against all the major currencies, as the Japanese currency continues to benefit from risk aversion.

Tomorrow, the G8 Meeting is set to commence in Italy. A range of issues are set to be discussed there, such as the Dollar's role as the world's reserve currency. If the government's of the main economic powers speak up about replacing the USD as a world reserve currency, then the greenback is likely to plummet in the coming days. In the meantime, it would be a wise choice for traders your Dollar positions now, prior to this crucial event.