Now that the US Presidential Election is over, investors and Forex traders are shifting their focus away from the uncertainties surrounding the election, and concentrating on budget issues. The next hurdle is the fiscal cliff, and concerns about that fiscal cliff are weighing on high beta currencies today.
In earlier trading, shortly after the announcement that President Barack Obama had won another term, the US dollar dropped. The fall was attributed in large part to the idea that the Federal Reserve will keep its quantitative easing program in place. After the brief drop, though, the greenback has turned around and is heading higher on concerns about the budget.
Now, the US dollar index is rising, with the greenback gaining against major high beta counterparts as risk aversion sets in. Safe haven flows are turning traders to the US dollar as concerns about the fiscal cliff in the United States rise. It’s not surprising that traders are looking for safety right now.
At 14:03 GMT the US dollar index is up to 80.808 from the open at 80.699. EUR/USD is down to 1.2753 from the open at 1.2813. GBP/USD is also lower, falling to 1.5971 from the open at 1.5996. USD/JPY is lower as well, with the yen gaining on safe haven demand, falling to 79.9770 from the open at 80.3575.
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