Easing Credit Woes Pressure Dollar
The U.S. Dollar finished lower today against a basket of trade weighted currencies. The Greenback was under pressure all day and never quite recovered following an overnight announcement that Dubai received $10 billion in financing from Abu Dhabi to pay part of the debt held by the state-owned Dubai World.
Global investor concerns were eased by this event because it helped to alleviate the need to use the Dollar as a safe haven investment. Last week, the Dollar rose partly after a credit ratings downgrade of Dubai owned entities along with downgrades of Greece, Portugal and Spain.
Trading was lackluster and slow ahead of this week’s Federal Reserve Open Market Committee meeting on December 10th. Investors seemed reluctant to take a big position ahead of this last meeting for the year. Since the FOMC’s last meeting in November, the U.S. unemployment rate has dropped to 10% and retail sales have risen above expectations. Job losses and consumer spending are two key input factors the Fed uses to determine its interest rate policy.
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