Mixed Fundamental News Weakens U.S. Dollar

The U.S. Dollar lost ground to all the major currencies on Tuesday on mixed fundamentals. There was no theme in the market today as many of the currencies reacted to their own individual news.

The U.S. Dollar lost ground to all the major currencies on Tuesday on mixed fundamentals. There was no theme in the market today as many of the currencies reacted to their own individual news. After the tone was set in each market, comments from U.S. Treasury Secretary Geithner helped move the markets but I wouldn’t say he was the main catalyst of today’s action.

Geithner basically calmed the selling pressure in the U.S. banking sector today by stating that the vast majority of U.S. banks are well capitalized. He also tried to squash rumors that several banks have inadequate capital levels. The general theme surrounding his commentary was that banks have enough money to keep lending, but that bad debts are slowing the recovery. If anything his commentary encouraged traders to take on a little more risk.

Another report which may have neutralized the Geithner comments was the report from the International Monetary Fund of a possible $4.1 trillion in toxic debt still floating in the global banking and financial institution pipeline. Although this report was actually leaked about two weeks ago, Forex traders have to stand up and take notice. The report didn’t make it clear which banking systems have the most exposure but one has to believe that heavy exposure in emerging market banks could spread quickly through the global economy with the European Union banks facing the most exposure.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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