Risk Appetite was boosted on Monday after Abu-Dhabi announced a ten billion Dollar (US) bailout of Dubai’s “Dubai World” holding company which announced two weeks ago that it will need to restructure its current debt load. News of the move, a surprise to the markets, immediately dropped the Dollar broadly as investor’s confidence returned and their taste for risk resumed. The Dollar Index, a non-traded indicator that matches the greenbacks performance against a basket of six major currencies, fell within two minutes of the report, down .2% to 76.417 after hitting a month high on Friday.
Less than two weeks ago, news that Dubai World holding company might default shook all financial markets and led to a sell-off in riskier assets, including the high-yielding Australian and Canadian Dollars and causing a modest rally in the US Dollar and Japanese Yen.
At 11:00PM GMT, the US Dollar was trading down .12% to the Euro to 1.4632, down .66% against the Japanese Yen to 88.51, down .2% versus the British Pound to 1.6228, down .4% to the Canadian Dollar to 1.0653, and down .14% to the Swiss Franc to .7245. The Dollar was up .21% to the Australian Dollar to .9106 although at the time of this report, the trend for the USD was lower.
CHART: US Dollar Index (USDX) – 1 Year
The Dollar has taken a beating since the financial debacle of 2008. As you can see from the chart below, the Dollar rallied in February after a round of stimulus was passed by the new Obama administration. Since then, the Greenback has been on a steady decline, past the low of 77.79 from last December after news that Goldman Sachs and Bank of America were going to accept government “bailout” funds caught traders by surprise. Both Goldman and BOA have returned the borrowed money and the economy has been giving off hints that it is on its way up, however as you can see the Dollar continues to slide. Will 2010 bring about a new trend here? We just need to wait and see..
Written by Finexo.com