11-19-2009, 09:30 AM
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FX Analyst
Superior Master Contributor and Member
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Join Date: Feb 2007
Posts: 889
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U.S. Dollar Gains in Forex Trading
Greenback higher in currency trading on risk aversion The risk trade is once again faltering. After yesterday's rejected attempt by the euro to break through 1.50, it is little surprise that consolidation is the name of the game today. The economic news that is sending the risk trade out of favor is helping the dollar today.
GFT's Kathy Lien reports in FX360 that some of the factors that are leading to risk aversion include:
- Continued weakness in the U.S. housing market, as evidenced by October's home building starts.
- Unexpected inflation in October, at a time when many people probably can't afford the higher prices.
- Weakness in the labor market, even though continuing jobless claims have fallen.
In the end, it is more about conflicting economic data than anything else. Investors are showing caution, concerned that they got ahead of the pace of economic recovery. As a result of this caution, the U.S. dollar, which has been a safe haven currency, is gaining in forex trading.
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