Dollar Climbs Against Pound and Euro

Tuesday was inauguration day in the US and the country celebrated the swearing in of Barack Obama. Tuesday was also a good day for the US dollar as it climbed against the Pound and the Euro. The dollar hit its highest level since December against a basket of currencies giving many investors Forex opportunities. Many traders and investors saying that euphoria about Obama’

s inauguration increased short term demand for the Dollar.

Pound’s Biggest Drop Since 1992

He British Pound fell 3.5% against the dollar and is heading for its biggest drop since 1992. The Royal Bank of Scotland on Monday announced the biggest losses in UK corporate history. Marco Annunziata, head of currencies at Unicredit in London had this to say, “Sterling is falling on a continuation of banking sector concerns from yesterday. Further deterioration in UK banks will require more government funding,”

Euro Zone Nations Face Credit Downgrades

The beleaguered Euro was stung further on concerns that more euro zone nations may face credit ratings downgrades. Many analysts said a bigger than expected improvement in the German ZEW (Centre for European Economic Research) economic sentiment survey failed to lift demand for the Euro. The Euro drew little cheer from the ZEW institute’s announcement that its German economic sentiment index improved to -31.0 in December from -45.2.

Standard & Poor’s Downgrades Spain

The dismal economic figures and the banking troubles in the UK is bound to have an effect on Forex trading and Forex investment opportunities. On Monday there was even more bad news for the Euro Zone as the European Commission forecast a 1.9 percentage shrinkage in the economy in 2009 and Standard & Poor’s downgraded Spain’s credit rating.

Optimism About Obama Administration

The decline of the Pound and the Euro helped to push the dollar higher against major currencies. Anther factor affecting the dollar is optimism that the incoming Obama administration will take measures to improve the economy. Marco Annunziata also had this to say about the incoming administration, “There are hopes that a change in the U.S. administration will bring about a turnaround in the economy, even though this won’t happen overnight. The inauguration is crystallizing all expectations that the U.S. economy will be the first to recover from the recession.”

Many Forex traders and investors around the world are hoping that the new administration in Washington will bring about economic recovery. A recovering global economy is sure to bring investors new Forex opportunities.

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