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Business FX Blog

Adam Solomon is a specialist in business foreign exchange issues at foreign exchange brokers TORfx.

The idea of this column is to assist businesses in saving money on making or receiving payments in foreign currency. It is developed with all companies in mind from public companies with large and complex operations, to smaller companies and individuals.

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Home Forex Check Forex Rate Risk hurts dollar

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Risk hurts dollar PDF Print E-mail
Written by Gary Howes   
Monday, 29 June 2009 09:51
Forex and Commodities: Dollar continues to lose steam, oil slips and gold rises.
 
The dollar continued to lose steam against major currencies on Friday, after a better than expected report on US income and as positive sentiment sparked appetite for riskier trades.

Optimism that the economic crisis is easing clipped demand for safe haven currencies. Sentiment towards to the greenback also came under pressure from fresh calls by Chinese officials to create an alternative sovereign reserve currency, some analysts said.

The euro was trading at $1.4068 late Friday while sterling also rose against the broadly weaker buck. The pound hit a high of $1.6536 as the dollar’s safe haven allure faded.

Sentiment towards the pound sterling was also boosted by recent upbeat UK economic data and comments from the Bank of England that Britain's banks are in a healthier condition than six months ago. However in its latest Financial Stability Report the BoE added that banks are vulnerable to more economic shocks.

Comments by BoE Governor Mervyn King that the economic recovery could be a "long, hard slog", increased expectations that the central bank would not be tightening monetary policy any time soon.

Crude slips over $1, gold above $940

 
US crude oil tumbled over $1 on Friday amid losses on Wall Street and as concern about weak demand dominated.

On Thursday oil futures rose above $70 a barrel on news about more attacks on oil pipelines in Nigeria, however, by Friday reports of a 60-day cease fire in the Niger Delta took crude prices lower.

The Energy Information Administration’s data showing weak demand, on Wednesday, also softened demand for the black stuff.

US light crude oil for August delivery settled $1.07 lower at $69.16 a barrel on the New York Mercantile Exchange.

A weaker dollar capped a bigger drop in oil prices while among precious metals gold prices settled above $940. The weaker greenback boosted the yellow metal’s appeal as an alternative investment.

COMEX gold for August delivery settled up $1.50 to $941 an ounce. The Federal Reserve’s announcement that it will keep interest rates close to zero for ‘an extended period’ also boosted demand for gold. Silver for July rose 12.3 cents to $14.128 an ounce.
 

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