Reply #42: dollar watch

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Dollar's Future Blurred Further after G20 Promises and NFP Plunge

http://www.dailyfx.com/story/bio1/Dollar_s_Future_Blurred_Further_after_1239234995720.html

Traders and other market participants were looking for relief - or at least a sense of clarity - from the G20 meeting last week. For the US dollar, the stakes were especially high.


The Economy And The Credit Market



Traders and other market participants were looking for relief - or at least a sense of clarity - from the G20 meeting last week. For the US dollar, the stakes were especially high. American policy officials have gone out on a ledge in an attempt to turn a domestic recession around; but their efforts are clearly falling short as consumers, businesses and financial institutions realize the crisis is a global one. The best outcome for the summit in London would have been a clear set of actionable steps that would have spread the responsibility for recharging the global economy amongst the world’s largest nations. While the language of the statement was convincing, a critical review suggests a lack of responsibility and time line will inevitably render the promises made ineffective. This leaves the dollar at the mercy of speculation over its role as a safe haven and the potential for its economic slump to devolve into a depression. Considering the jump in the unemployment rate to a quarter century high and the dour forecast from the FOMC statement, it is difficult to locate the dollar’s good qualities.

A Closer Look At Financial And Consumer Conditions



Financial market conditions continue to show general improvement. However, participants are still clearly on edge; and this fragile rebound for confidence in the system could quickly come crashing down should another crisis point develop. This is no doubt the concern of both the Federal Reserve and Treasury Department. It has been suggested that the government will delay the results of its stress test of the United States’ 19 largest banks until after earnings season to avoid an adverse market reaction. And, in their statement, the FOMC said credit “remained very tight,” financial markets were “fragile and unsettled,” and pressure was “intensifying.”



For months, investors and traders have more-or-less overlooked the general health of the US economy. This has been the case because either its global counterparts were in worse shape or demand for liquidity drew capital into the deep end of the market’s pool. However, with fear of liquidity letting up and other governments ramping up fiscal stimulus, the American economy and currency may lose its appeal. And, considering the bearing on economic trends, the future is dimming for the dollar. Last week, NFPs plunged another 663,000 – boosting joblessness to 8.5 percent. This may end up producing what the Fed calls a ‘feedback effect.’

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Bank of England Holds Rates Steady at 0.50%, Canadian Unemployment Rate Jumps to 8-Year High

http://www.dailyfx.com/story/topheadline/Bank_of_England_Holds_Rates_1239275794621.html

The Bank of England held the benchmark interest rate at the record low of 0.50% and said that it will need another 2-month to complete its asset-purchasing program. Canada lost another 61.3K jobs in March, which crossed the wires slightly weaker than expected, while the annual rate of unemployment pushed to an eight-year high of 8.0%



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