The downturn in the global financial market paired with mounting growth concerns for the entire world has certainly taken a toll on the New Zealand dollar as investors limit their temperament for high-yielding assets.
The Australian dollar continued its current downward trend as the RBA shocked markets with a 100bps cut, that would ignite a coordinated easing by several of the major central banks.
Just like its Japanese and US counterparts, the Swiss franc is reaping the benefits of its safe haven status. Known as a perennial funding currency and a timeless harbor for capital, the currency will continue to benefit from flight to safety flows.
Economic fundamentals will fade into the background as the Japanese Yen exchange rate continues to be a direct reflection of financial markets? risk sentiment amid the continuing global credit crisis.
Despite the approval of a massive $700 billion bailout plan and coordinated global rate cut, panic continues to dominate market sentiment. For the US dollar, the influence of this undesirable state will determine whether the currency can sustain its aggressive rally or a dramatic retracement brings it back to Earth.
Regardless of the market you are following or the specific assets you trade , risk and panic are the common threads for activity. The world’s economic super powers have already attempted to forcibly revive confidence in lending and investing; but to no avail.
Finance chiefs of the world’s major economies pledged on Friday to prevent big banks from collapse and to work together to stem the financial crisis after another day of gut-wrenching drops on world markets.
The US Dow Jones Industrials Average recovered from its earlier drop below the critical 8,000 mark, but the 1.49 percent daily decline was the eighth such loss in as many days?the Dow?s worst streak since the aftermath of the September 11, 2001 terrorist attacks.
The Canadian dollar plummeted over the course of the last week as the combination of weak oil prices and a massive US dollar rally led USD/CAD to spike.
The euro plummeted against the greenback to hit the lowest levels in over a year before finally hitting support at the 6/13/07 low of 1.3263. Indeed, fears of a financial market meltdown drove the US dollar higher across the majors as the G7 meeting in Washington failed to yield anything supportive of investor sentiment.
