Thursday, December 11, 2008
Dollar Falls on Speculation Senate Will Reject Automaker Deal
For the past three months the pattern has been that any bad news for the U.S. economy was good news for the dollar (and bad news for foreign currencies). However, this pattern has now been broken.
The dollar's trend has been reversed, thanks to large-scale dollar selling by the Fed. With a top in place, traders will view any negative event for the U.S. economy as bearish for the buck and they will sell it. In addition there are many who feel the dollar is due for a big fall thanks to bailouts and growth in the monetary base, etc. These folks already have their reasons to sell and as they see the dollar falling, there will be pile on effect.