USD up 0.23 percent against major currencies
A strong dollar has made all the commodities more expensive for other currency buyers. The dollar rose above the Euro as the investors are in a bearish mode as far as the euro is concerned till positive news on the austerity package from Greece gets a nod. The economy is also waiting for the outcome of the close fight between Obama and Romney. The fiscal cliff problem could make the U.S. economy suffer a deep recession if there isn’t haste practiced in finding the solution as it would mean an increase in taxes and less money to spend. The U.S. budget deficit hence is in need of a quick revival. The dollar is presently strong though due to good employment news and bad times hovering over rest of the major currencies. Oil too is weak against the dollar due to uncertainty in demand.
Awaiting international aid
Euro stands at a two month low largely because of the Greece uncertainty. The investors are also holding back investments till the presidential elections are over. The strikes and protests from people will hope that the new austerity packages seeking international aid do not get passed. It is however necessary for the economy that the package gets a green signal as only then can about thirty million Euros of international aid flow from the Monetary fund to the weak economy. The decision of the euro zone bailout also awaits traders on Wednesday. The euro hit $ 1.2765 on Monday but ended up at $1.2789 for the day.
Steady around the 80 mark
The relationship with the dollar has been very predictable as the pair is falling with every bad announcement and rising, with each good news release. The uncertainty of the U.S. presidential elections is keeping the pair in the positive region and chipping off the losses. The situation also awaits news on the fiscal condition of Japan. The pair was unable to break the resistance level at 80.30 to extend its recovery and fell back to 80.24. At present the overall trend however is expected to stay bullish.
On Monday Brent futures fell to $105.40 as investors are holding back their investments. The traders are practicing caution before the results of the presidential elections. The hit in the oil demand has also been due to the super storm Sandy and a weak euro zone. Sandy has destroyed much of the oil supply infrastructure leading to this fall in the oil prices. The largest oil field in the U.S. has also been under maintenance since September 4. The ‘fiscal cliff’ problem could decrease oil demand even further if stringent actions are not taken to find a solution to it. Oil prices will also await the approval of Greece’s austerity package to help the debt ridden economy.