Dollar up following increase in risk aversion
- Last Updated on 09 February 2012
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Fresh concerns over the euro-zone debt crisis caused investors to revert back to safe-haven currencies yesterday, which led to the USD climbing vs. most of its main counterparts. Following the rejection of Greece's debt swap deal, concerns began to develop over Portuguese debt. Portugal is widely seen as the country closest to default after Greece and negative news out of the country tends to boost the dollar. The EUR/USD dropped well below the psychologically significant 1.3000 level yesterday, while the AUD/USD tumbled over 100 pips.
Turning to today, significant US news is scheduled to be released that could lead to market volatility. Traders will want to note the results of the Pending Home Sales figure as well as the FOMC Statement. The home sales figure is forecasted to come in well below last month's, which if true may cause the USD to slip against fellow safe-haven currencies like the JPY and CHF. Similarly, the FOMC is forecasted to announce that record low US interest rates are likely to remain for the foreseeable future. If true, the greenback could turn bearish going into the rest of the week.