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Dollar Falls on China Debt Fears, Toxic Asset Plans

The US dollar is falling across the board at the beginning of the new forex week. This happens against all the currencies, except the Yen of course. Toxic Asset Plan by Geithner and China Debt Fears are driving the dollar down.

The forex week began with a weakening of the US dollar: it lost ground to all the currencies, except the Yen. Dollar-Yen currency correlation still seems strong – when the dollar weakens, the Yen weakens even more. This happened on the last Non Farm Payrolls announcement, it happens now, and it happens all the time.

EUR/USD crossed the 1.30 mark, GBP/USD crossed the 1.42 mark, and even USD/CHF is back under 1.19, a line that it broke violently after the SNB decided to intervene to weaken the Swiss Franc.

Also notable is the Australian dollar, rising well above 0.66. AUD/USD long proves itself – it  now trades at 0.6623, continuing it’s move upwards, after breaking the closing channel.

As I wrote yesterday, the fears that the Chinese Prime minister Wen Jiabao expressed regarding the US debt, triggered a fast response from President Obama. These doubts about the US debt are very scary, especially when they come from the highest ranking people.

In addition, Timothy Geithner said he would soon detail about plans to  remove toxic assets from the balance sheets of American banks. This means more government bailout money. Geithner and Obama want to spend more money, thus print it out. Similar to the stimulus package, this money printing devalues the dollar.  

So, the dollar is on the fall at the beginning of the week. It will be interesting to see how the forex week unfolds.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.