Forex trading news

Though the dollar continues to push to new 14-month lows, the pace of this descent has cooled. However, this should not be considered a sign that conditions are actually improving for the US economy or its currency; because that would ignore the underlying fundamental current behind this benchmark – risk appetite. It has been said ad nauseam in the past months that the dollar’s primary driver is general market sentiment; and that reality has not changed. In fact, the correlation between currency and investor opinion may have actually intensified over the past week as the US dollar is forced more surely into its role of top funding currency while risk appetite maintains its bullish trajectory. Over the past few weeks, we have seen a notable pickup in the hawkish bearing of some of the Fed’s more prominent peers, which in turn leaves the American authority in deeper relief with its steadfast outlook for a mid-2010 return to tightening. Among the most notable central banks ahead of the curve are the RBA, RBNZ, ECB and perhaps even the BoE. While the Bank of England is still a long ways away from the milestone hike, the market’s perception of a hawkish turn on QE has set the tone. If the dollar has any hope of recovery in the near-term, risk appetite will have to plunge or US market rates inflate.