Greenback trades mix, as uncertainty circles the plan
On Tuesday, dollar was found trading mixed with uncertainty still hanging on, as traders look forward to details and outcome of rescue plan of government of United States for purchase mortgage-related assets following the current credit crisis.
In Asian trade, dollar was found easing against yen as it touched 105.31 yen from New York’s trade of 105.42. Due to public holidays, markets in Tokyo were closed.
On other hand, on Monday euro went down from 1.4796 to 1.4769, as dollar witnessed its worst single day fall against European currency. Euro even touched record high since 22nd august and prime move since 1999, as it moved to $1.4866.
While the government is discussing over the proposed $700-billion rescue plan for financial sector, dealers believe investors are still doubtful over the plan and are not sure of its effect on the crisis. Treasury economist with United Overseas Bank Group, Thomas Lam, says that the sketchy draft of the plan is little confusing for investors.
Lam added that dollar-yen is retorting to leap in oil prices across the globe. New York oil futures were found touching over a high of $16, on Monday.
David Sing at Forex Capital Management added that dollar is bearing the uncertainties surroundings the result of the rescue plan of the US government and that everyone in the market is awaiting the effects, as well as the consequences of the proposed rescue plan.
Lam feels that investors are bound to take hint from the testimony by Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke, anticipated on Tuesday and Wednesday. He said that its all will be of public interest as markets are yet to get stable and are in unpredictable stage.
There is a section of dealers that feel that market is worried about the rescue plan and its outcome, as it is feeling that the funding of the rescue plan will prove to be lot more tricky and could pressurize US currency, which could further lead to consideration on rate hike by Federal Reserve for strengthening the currency. The section of market is sensing rate cute by US in order to boost the economic conditions and the disturbances.
While there are some who are not sure about the plan, President George Bush and Paulson after disclosing the rescue plan are now looking forward to the congress for approving the suggested idea.