Wednesday, 2 Feb 2011

Dollar Rebounds on Return to Risk Aversion

The dollar clawed back some losses while the euro slipped on Wednesday after an apparent lack of consensus about a euro zone rescue fund highlighted ongoing uncertainty about how to solve the region's debt problems. The Dollar is currently trading higher against the EUR by nearly 80 pips at 1.3770. It is also trading higher against JPY and CHF.

A ratings downgrade of Irish government debt by ratings agency Standard and Poor's also underlined fundamental weakness in some euro zone countries, prompting short-term speculators to sell the single currency.

Tomorrow, forex traders cannot afford to overlook a batch of data that is expected from the leading economies. Both the Europe Minimum Bid Rate and U.S ISM Non-Manufacturing PMI will be released at 12:45 GMT and 15:00 GMT respectively, promising an extremely volatile trading day. Traders should take advantage of this unique opportunity and use the volatile market in order to capitalize profits.