Dollar falls on credit rating fear and NZD advances versus USD

Dollar falls on credit rating fear and NZD advances versus USD

05-22-2009 14:33

The Dollar dropped versus the Euro to the weakest level since January on the back of credit rating fears. The S&P credit rating group modified the UK rating forecast and traders fear that the US outlook will also be revised.
The Kiwi Dollar (New Zealand Dollar) went up for the fourth consecutive day versus the US Dollar and gained for the second day against the AUD (Australian dollar), stimulated by the indications that the worldwide recession weakens.

Possible credit rating downgrade

The Euro advanced versus the Pound Sterling and against the US Dollar today due to the potential rating downgrade. This major event will affect the British and US economies that rely on debt. The Japanese Yen followed the Euro example and went up versus the GBP and against the USD, also boosted by finance minister Kaoru Yosano’s comments that the administration will not utilize the currency intervention in order to prevent a further rise of the Yen.

UK AAA credit rating outlook from ‘stable’ to ‘negative’

The UK AAA credit rating forecast has been modified by Standard & Poor’s from ‘stable’ to ‘negative’. According to some analysts a ‘negative’ status for the US rating forecast is rather fare away and the UK rating will possibly first have to face a real downgrade, while Dollar bulls are close to panic. If the rating will be downgraded, governments’ obligations and the currency will lose its attractiveness and this is likely to be followed by the central bank printing the required money.

Contraction Asian region less than expected

Commodity prices increased significantly this week and the Aussie (Australian Dollar) continued to gain versus the Japanese Yen and against the Greenback (US Dollar). The contraction in the Asian economy proved to be less than was estimated by market strategists, which supported the inflow of funds into the New Zealand and Australian economies. New Zealand also demonstrated the highest level of immigration in 5-year.

Serious uptrend gold and silver

Gold and silver rose considerably in the past three days, while the AUD surpasses the major resistance level versus the USD now. The NZD also increases gradually to such levels. You should be bullish on the ‘Kiwi’ and ‘Aussie’ if you are bullish on the commodities, according to analyst.