Russian Wind of Change Helps Dollar

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Alexei Kudrin, Russia’s Finance Minister, sent gave the dollar some strong back wind, by saying that the dollar will remain the world’s reserve currency. This policy shift strengthened the dollar ahead of the TIC Long-Term Purchases.

Contrary to the position of President Dmitry Medvedev, his finance minister said that there’s no alternative to the US dollar. This news eased the economists that feared that a global currency or SDRs will replace the US dollar as the world’s reserve currency.

Kudrin rushed to reassure investors of Russia’s confidence in the dollar just days after his boss, President Dmitry Medvedev, questioned its global status, joining China’s central bank GovernorZhou Xiaochuan in suggesting the world may need another benchmark for settling international debts.

This news, at the wake of the forex trading week, sent the dollar upwards. This is strongly felt in EUR/USD, that lost 1%, and now trades at 1.3850. The impact is also strong in the USD/CAD that broke last week’s highs, and now trades above 1.13.

The fall of the loonie comes ahead of the Manufacturing Sales release. For more on USD/CAD, read the Canadian Dollar Outlook.

The British Pound remains strong against this cold Russian breeze: GBP/USD trades now at 1.6365. It dropped by only 0.4%. The British Pound is still close enough to the major resistance line of 1.6660.

The first British figure is published tomorrow. Here’s an outlook for the British Pound.

The Swiss Franc also suffers from this Russian wind, and also from a bad figure: Producer Price Index in Switzerland fell by 0.3%. This drop in PPI wasn’t expected. It was expected to rise.

The Swiss Franc awaits a Libor Rate decision this week. This low inflation figure means that the rate will stay low for a long long time. This is a critical week for the Swiss Franc.

Later on, the TIC Long-Term Purchases will move the dollar. This figure shows where the money flows to.

For more on the week’s events, at least the expected ones 🙂 – read the Forex Weekly Outlook.

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About Author

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.

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