U.S. Dollar Falls Against Most Major Currencies on Geo-political Concerns and Rising Oil Prices

Ongoing bad economic data as well as rising oil prices related to geo-political tensions are driving the U.S. dollar down, as it fell against most major currencies on Thursday.

Oil prices have had a direct impact on the strength or weakness of the dollar, as its recent strength correlated with dropping oil prices, and the increase in oil prices is now again putting downward pressure on the greenback.

"The sharp drop in crude prices single-handedly triggered the sharp dollar rally between July and mid August. Now that oil prices are creeping higher once again, it would only make sense to see the U.S. dollar slip as well," wrote Kathy Lien, director of currency research at GFT, in a note to clients.

A report from the Conference Board added pressure to the dollar, as leading economic indicators dropped by 0.7 percent in July, raising the possibility that the economy could flatten out for the rest of 2008.

Manufacturing in the northeast U.S. also continues to drop for the ninth month in a row, although it did slow down in its contraction so far in August, according to the Federal Reserve Bank of Philadelphia.

Continuing problems in the finance and mortgage industry are also keeping pressure on the dollar, as concerns over Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE), and other financial institutions aren't letting up.

Reports that Lehman Brothers (NYSE:LEH) held secret negotiations to sell up to have the shares in the company to Asian concerns didn't help spark confidence in the sector.

Weaker US Dollar and Related News

Dollar slides on higher US inflation, oil gain

FOREX-Profit-taking, weak stocks drag US dollar lower

U.S. inflation pressures mount

Dollar Gives Crude a Lift

The Dollar, Oil and Airlines: A Nice Relationship Until The Government Steps In

Gold firms as US dollar eases but uncertainty remains

Gold ends up; weak dollar fuels commodities rally

Canada's Dollar Rises as US Dollar Falls, Commodities Rebound

Canada's Dollar Rises as US Dollar Falls, Commodities Rebound

ECB Launching U.S. dollar Liquidity-providing Operation

Under the auspices of the U.S. dollar term auction facility, the European Central Bank is starting a 28-day U.S. dollar liquidity-providing operation with a goal of reaching a volume of $20 billion.

Fixed rates will be the same as the marginal rate offered contemporaneously by the U.S. Federal Reserve System.

August 12 at 9:30 a.m. will be the final time bids will be accepted.

Dollar Gains Against Major Latin Currencies

The U.S. dollar enjoyed gains against major Latin American currencies today, against the backdrop the Federal Reserve was going to keep interest rates where they're at, with no plan on raising them any time soon.

Today's gains were against the Chilean peso, Peruvian Sol, Brazilian real, Mexican Peso and Colombian peso.

With the Chilean peso, the dollar increased as high as a two-month high of 515.13, although falling back close to the end of the session.

Against the Peruvian sol, the greenback rose to a two-week high of 2.8350, in contrast to the 2.7725 close on Monday.

The dollar advanced for an 8-day high against the Brazilian real, quickly jumping to 1.5775 at about 9:00 am EST.

With the Mexican peso it also got off to a quick start in the morning, as it grew from its poor performance yesterday of 8.8568; a multi-year low. It increased to 9.9377 early in the morning, and held fairly strongly at the end of the session.

Great Advice For New Forex Traders

I wanted to take the time to share some great advice for new forex traders. This can be quite an intimidating market to get into. I know when I first heard there was three trillion dollars moving around each day, and huge banks were going to compete along side me, I was very intimidated. Don't be. You're really not competing against anyone. Most traders are willing to share with each other because we are all looking to ride the waves of the market and profit. I'm going to share a little with you that should help you out.

News is a pivotal source of forex information, it just isn't directed to forex traders. You'll never hear something directly informative to a trader, but you will hear the information that inevitably gets the market moving in new directions; the economy. Economic news is the stuff that causes currencies to rise and fall, so it is important to make sure you're on top of that. Good news, is good for currency and bad news is bad for currency.


You need to keep your trading strategy very simple. The people that end up losing in this game are the ones that have these very long strung out strategies that are very conflicting and hard to understand. There is no need to reinvent the wheel here. There are a very simple strategies you can follow everyday and make a profit.

You also need to learn to be a logical creature. Emotion in this business can be deadly because it makes you make bad trades, it makes you hold onto unprofitable currency and in the long run leads you into the red. Being logical makes you a cold calculated machine that makes trades on one characteristic, profit.

Lastly, get yourself automated software like Forex Killer. It saves you a lot of time and headaches since it will go through the avalanche of currency data and search for profitable trends that you can use to your advantage.

By: Charley Nash

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