US dollar is gaining against the other major currencies today as risk aversion sets in, thanks to the fiscal cliff. Right now, Forex traders are ignoring better economic data and instead focusing on what could be a financial disaster in the United States. And that is driving the greenback higher as Forex traders look for safe haven.
It’s a bit counterintuitive: There are concerns about the US economy, but the US dollar is on the rise. Even with the fiscal cliff worries, the greenback is still considered the most stable of world currencies, and is in high demand as a safe haven currency.
Congress is getting ready to go its break, and there are worries that a fiscal cliff deal won’t be done before they leave. This concern is leading to risk aversion, and the dollar is on the rise as a result. With Boehner’s “Plan B” outright rejected by the House, and with Democrats up in arms about Obama’s thoughts on “chained CPI” as part of negotiations, getting a deal done will be hard.
And that means more likely gains for the US dollar.
At 14:06 GMT EUR/USD is down to 1.3198 from the open at 1.3244. GBP/USD is down to 1.6225 from the open at 1.6279. USD/JPY is down to 83.9900 from the open at 84.3835.
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