Monday, December 14, 2009
The U.S. Dollar is backing off a two-month high versus a trade-weighted basket of currencies on the news that Dubai received $10 billion in financing from Abu Dhabi to pay part of the
debt held by state-owned Dubai World. This event is helping to alleviate one of the concerns which drove traders into the Dollar last week, the others being downgrades in Greece, Portugal and Spain.
The overnight selling pressure is a sign that traders may be less risk averse and looking at taking on more risk today in the higher yielding currencies.
The main concern for investors this week is the Federal Reserve Open Market Committee meeting on December 16th. Since its last meeting in November, the U.S. unemployment rate has
dropped to 10% and retail sales have risen above expectations. Job losses and the lack of consumer spending are two key determinants studied by the Fed. Traders are looking for the Fed to look at
these two reports and perhaps issue a more hawkish statement. A dovish statement will be a surprise which is not likely to bode …
