By: Barbara Zigah The U.S. Dollar Index remains hovered close to a 3-year low in light Asian trade, underpinned by the likelihood of prolonged low interest rates and a growing U.S. budget deficit. Some market players are expecting that as markets resume normal operations following the Easter holiday the Index is likely to test a record low. As reported at 3:12 p.m. (JST) in Tokyo, the U.S. Dollar fell to 73.735 .DXY, a new 3-year low, once it broke through the 74.170 .DXY trough established in 2009.
Market players are even more concerned that recovery of the U.S. economy could falter if the agreement between the President and the Legislature is insufficient to significantly reduce the deficit, either through tax hikes or spending cuts. Either or both could compel the U.S. Federal Reserve Bank to maintain their interest rates at the current historic low, even at a time when central banks throughout the world are raising interest rates to fight inflation.
Most analysts agree that the Dollar’s decline comes from the loss of investors’ confidence in U.S.-denominated assets, especially given the recent threat of a credit downgrade by Standard & Poors. Markets now seem to be measuring the impact of a U.S. debt downgrade, although they had well accepted and absorbed the announcement originally.
http://www.dailyforex.com/forex-news/2011/04/U.S.-Dollar-Index-Approaches-All-Time-Record-Low/7747
Market players are even more concerned that recovery of the U.S. economy could falter if the agreement between the President and the Legislature is insufficient to significantly reduce the deficit, either through tax hikes or spending cuts. Either or both could compel the U.S. Federal Reserve Bank to maintain their interest rates at the current historic low, even at a time when central banks throughout the world are raising interest rates to fight inflation.
Most analysts agree that the Dollar’s decline comes from the loss of investors’ confidence in U.S.-denominated assets, especially given the recent threat of a credit downgrade by Standard & Poors. Markets now seem to be measuring the impact of a U.S. debt downgrade, although they had well accepted and absorbed the announcement originally.
http://www.dailyforex.com/forex-news/2011/04/U.S.-Dollar-Index-Approaches-All-Time-Record-Low/7747
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