Forex News and Events:
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Demand for the dollar continues to soar as the Greenback fights back after having started the week on a low. While Fed Chairman Bernanke assured the Senate Banking Committee on Tuesday that no banks would be nationalized this still is a concern for investors globally – having to nationalize a major U.S bank would be yet another nail in the coffin for the U.S banking sector and it’s deviant ways. More details of the Stress tests that will be carried out next week on the 19 largest banks in the U.S have the markets worried that Federal investigators may find some more skeletons in their closets. The Banks will receive investigators for a 2month period to asses the commercial and financial viability of these institutions. Prior to this process the banks will be given a 6-month period to raise the necessary funds (either publicly or private) needed to assure the good health of their businesses. The Greenback has regained its strong footing as further reassurance from the U.S Government have somewhat stemmed the deep angst within the markets of late. The lack of detail – until now – about the various stimulus packages has had investors uneasy. President Obama and Ben Bernanke have not ruled out the possibility of spending even more in an attempt to eradicate systemic risk, THE Proposal sent to congress today asks for an additional $750Bn to inject into the financial sector. This said the substantial debt the U.S is running to save their economy (deficit for year ending Sept. 30 to $1.75Trillion) is reaching astronomical proportions; will the largest economy in the world be able to sustain such stresses? One thing is for sure, China has assured the U.S it will continue to buy U.S Treasury Securities as it has been deemed mutually beneficial and important for the global economy. The focus is now on Europe. With some gleams of hope coming from the UK – announcing an asset protection program this morning (which has financial stocks up sharply despite catastrophic earnings by RBS, which lost -$34.2Bn last year – stock is up near 30%). This refocus on the Euro-zone’s lack of a concerted effort will continue to weigh on the currency. Further weakness in Japan will see the Yen continue to weaken – aiming for triple digits.
