Dollar Closes Sharply Higher for Week
The U.S. Dollar closed sharply higher for the week, boosted by a weaker Euro, news that China was tightening its monetary policy and an increase in demand for lower yielding assets. Late in the week, the Dollar flattened out after President Obama proposed restrictions on financial institution trading. The early read is that investors feel the proposal is Dollar negative and in the long-run may discourage investors from buying U.S. assets.
The EUR USD was under pressure all week as concerns about Greece’s budget deficit spiraled out of control as investors began to factor in the possibility of a default. Matters weren’t helped by the European Central Bank and European Union’s refusal to offer any help, although a rumor late in the week seemed to indicate that some sort of loan was going to be made available. This matter is not expected to go away and may even escalate if similar problems develop in Spain and Portugal.
The GBP USD started the week strong, but weakened late in the week after a series of negative economic reports made investors realize that the U.K. economy still has a long way to go to catch up to other major nations. On Friday, it was reported that retail sales were better, but missed analyst estimates.
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