Dollar on the Defensive Pending Bernanke Testimony, Retail Sales Data

July 14, 2008

The US dollar had a good start when the forex market opened in Asia on Monday and into the European trading session, inspired by the US government’s plan reported Sunday evening to help the struggling mortgage giants Freddie Mac (FRE) and Fannie Mae (FNM). But as we move into the New York session, traders are taking their profits on dollar strength for fear that the US currency may not have sustained buying interest due to continued downside pressure on the US stock markets and focus on oil prices.

The US dollar will play defense this week, how could it not? The US subprime crisis is rearing its beastly head, and instead of talking about economic recovery, we are talking about an economic disaster that has to be averted or cushioned to some extent. George Soros is suggesting that there could be further weakness for the greenback.

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