Dollar Gains on Rescue Plan Agreement

The U.S. dollar rose today against the euro and the pound after the U. S. President and Congress leaders reached the agreement on the $700 billion plan to buy out lossy assets from the financial companies.

Dollar accelerated its growth after Harry Reid, the Senate Majority Leader, said that the plan will be considered and the Senate will vote on it before October 1st. The Great Britain pound and the euro fell today as the European governments had to intervene into the currency markets to support national financial companies.

The dollar is heading for another short-term rally, according to the Forex analysts. U.S. financial rescue plan will help the economy, but the dollar’s benefit may last not for too long. Higher governmental debts will press on the U.S. currency in the long-term.

While the U.S. help to the troubled companies will probably come to an end with the plan that will eliminate the subprime-related assets from their list, Europe’s companies still don’t get such a large-scale help. If the U.S. financial sector rebounds before the Eurozone’s does, dollar may show a good bullish rally on Forex.

EUR/USD dropped from 1.4518 to 1.4348 as of 8:01 GMT today — after opening with almost 100 pips downward gap this week. GBP/USD declined from 1.8280 to 1.8116, losing more than 160 pips to the opening gap earlier. USD/JPY fell from 106.24 to 106.05 as the Japanese yen rose on speculations about the Eurozone’s financial problems.

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