USD Demand Triggers Biggest Weekly Gain

The U.S. dollar showed the biggest weekly gain ever against the euro on the Forex market this week as the global demand for dollar liquidity kept the greenback up despite the strong negative factors.
During the last day of trading, the U.S. dollar continued its growth against the euro, while erasing a part of the early gains against the Great Britain pound and remaining almost unchanged against the Japanese yen. This proves not only the strength of the dollar, but also the weakness of the euro, which probably means that Eurozone may soon require its own «Paulson’s plan».
The dollar will continue to perform well on the Forex as long as the current crisis provide the demand for the dollar liquidity. Even if the FOMC decides to reduce the funds interest rate by the end of the month, which is a very like event, dollar may still grow as the demand for liquidity is really great nowadays.
The European Central Bank started to seriously consider the possibility of cutting the 7-year high 4.25 percent interest rate to stimulate the financial sector. If the rate will be cut in early November, euro may experience another downside rally.
EUR/USD lost almost 5.2 percent this week, going down from 1.4518 to 1.3770. GBP/USD dropped almost 3.1 percent this week, declining from 1.8280 to 1.7714. USD/JPY lost less than 1 percent point, losing only about 90 pips.

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