The U.S. Dollar reached a three-month high this morning after S&P Corp. downgraded Greece’s credit rating which in turn gave momentum to a strong rally. The rally started last night but is becoming stronger because it is possible that the Euro Zone's sovereign debt may be downgraded consequently. Investors are concerned that the spread of bad debt throughout the continent could cause serious problems for the banking industry, undoing the current economic recovery.
The Euro turned to the downside after a 9-month upside rally. The weakness is caused by fundamental as well as technical factors. Traders expect to see a short-term rebound if Euro gets oversold due to the panic of the debt problem.
As well as the weakness in the European currency, the British pound is under pressure caused by a lower-than-expected retail sales report. This piece of news overshadowed Wednesday’s better than expected British jobless claims data. Technically, the British currency failed to hold its zone of support and is now trading at 1.6292 which is the lowest in three months. Forecasts indicate that the GBP/USD pair may fall to as low as 1.5941.
Lower stock prices and the possibility of an increase in the U.S. interest rates are putting pressure on all the other currencies across the board. As for Australian dollar, for example, a report showed slower than expected 3rd Quarter growth which led into selling and acted as a sign to traders that the Reserve Bank of Australia was unlikely to hike interest rates over the near future. The Aussie turned the uptrend down to trade at .8905.
Gold has lost more than 100 dollars due to the greenback strength, breaking away from the strong rally during the last three months that set and broke records one after the other in an unprecedented manner. Falling gold prices and the weakening stock market are pressuring the Canadian Dollar. Technically, the USD/CAD is expected to trade around 1.0991 in coming days.
Higher demand for the U.S. Dollar and the debt problem in the Euro Zone are helping to pressure the Swiss Franc. Traders are taking in the possibility that Swiss banks will be exposed to debt issues in Greece, Portugal and Spain. On the longer-term the forecast is a rise to 1.0469 and then to 1.0600 for USD/CHF.
As for the Iranian currency, rial declined against the U.S. dollar during the last week from 9986 rilas to the dollar to 10026. Forecasts point to a higher USD/IRR rate in the coming week as the dollar is gaining momentom against most major currencies and commodities.
http://www.forbes.com/feeds/reuters/2009/12/17/2009-12-17T215033Z_01_N17190295_RTRIDST_0_MARKETS-COMMODITIES-UPDATE-1.html
http://www.thestreet.com/story/10648050/1/stocks-hold-lower-on-mixed-data.html?cm_ven=GOOGLEFI
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