Risk Aversion Helps US Dollar

Risk aversion is helping the US dollar today in Forex trading, providing a boost as concerns about the eurozone once again become prominent in the financial markets. Forex traders are looking for some safety and stability, and they are turning to the greenback to get it.

The ICE dollar index is trading higher today, gaining as concerns about the global economy, especially as it relates to the eurozone, rise. Retail sales data in Germany showed disappointing numbers for January, with sales falling by 1.6%, instead of rising by 0.3%. Concerns about the German economy — and how it might affect the rest of the eurozone — are high right now and weighing on the euro.

Also, bad news in Spain is raising the specter of Greece. With a rising budget deficit target, and an increase in joblessness, some are worried that Spain could be the next sovereign debt issue in the eurozone, and no one wants a repeat of Greece.

The result is that the US dollar is higher. Better economic news has pervaded in the United States recently, further emphasizing the stability of the greenback. Forex traders are interested in the greenback for its safe haven status, preferring to preserve their capital rather than risk it.

At 14:30 GMT EUR/USD is down to 1.3224 from the open at 1.3310. GBP/USD is lower at 1.5874, down from the open at 1.5956. USD/JPY is up to 81.6260 from the open at 81.1155.

 

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