Dollar surges against Euro, Pound

By Pete Southern in LiveWire Economics Blog | December 23, 2009 20:20 |

The dollar has fallen back slightly Wednesday (December 23) morning against major global currencies after disappointing news on the home sales front. However, the dollar still remains relatively strong in the short and medium term against its major European competitors.

Treasury Secretary Timothy Geither commented Wednesday that the US economy is picking up and he jobs growth returning by springtime. Other commentary from officials Wednesday suggest the possibility for as much as four per cent gains in the Gross Domestic Product for the fourth quarter.

It is this general sense of optimism among government officials and signs that consumers are starting to spend that has contributed to a surge on Wall Street and renewed strength in the dollar.

Still lightly valued in the long-term, the greenback has made significant strides against other major currencies in recent weeks, most notably the Euro and British Pound. One Euro currently fetches $1.4320, over 8 pips below its recent 2009 high at $1.5144. A Pound is now worth $1.5977, also well below its recent 2009 high of $1.7043.

The brief pullback in the dollar surge against the Euro and Pound comes after the Bank of England decides in a 9-0 vote to leave its benchmark interest rate at .5 per cent, rather than to increase.

This modest jump for the European currencies is not expected to last long as many top foreign exchange analysts believe the dollar has begun a major correction against currencies that have beaten in down over the last several months and years.

Technical analysts have stated that the dollar has already pushed through major support levels against many of its global currency competitors, suggesting a trend reversal that would seem likely to carry on as the US economy only looks to improve.

The more currency speculators buy into these ideas the more the dollar momentum picks up speed. Usually, in a strong trend, brief interruptions of direction like the one caused with the Bank of England’s rate announcement are soon overlooked in the big picture of currency speculation.

Neil Kokemuller
10:50 AM EST
Wednesday, December 23, 2009

Neil Kokemuller is an Associate Professor of Marketing at Des Moines Area Community College in Des Moines, Iowa, USA. He has a MBA from Iowa State University. He is also in house stock market commentator at Live Charts UK, where you can find real time charts and share prices.

Please note: The information provided in this article is intended for informational and entertainment purposes, and not as advice for financial decisions or investments. Actions taken on the basis of the information shared is at the sole risk and discretion of the individual. Currency investment poses significant risk of loss.

Pete Southern About Pete Southern
Pete Southern is an active trader, chartist and writer for market blogs. He is currently technical analysis contributor and admin at this here blog.


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