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President Obama’s new regulatory proposal to curb trading by financial institutions and the fear that the economy may slow down led to a massive sell-off in equities on Wall Street. Support failed in the stock indices early in the session after fresh money failed to show up. This broke the pattern of the last two days and set the tone for a sizeable retracement break.

The USD JPY reversed its four day rally as traders sought safety in lower yielding assets following an announcement by President Obama to curb trading at financial institutions. The immediate reaction was to sell higher risk assets after Obama called for a reduction in the size and trading activities of financial institutions.

Dubai Financing News Rocks U.S. Dollar

Posted by Forexhound on December 14th, 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.

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