Talking Points:
US Dollar sells off on official announcement of the anticipated debt deal
Greenback traders jittery on a ratings downgrade
US Dollar hits a five month low
A look back at the past 24 hours of Forex trading using movements in the US Dollar Index:
US Dollar 15-Minute 08:00 10/16 to 08:00 10/17 EST
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The Dow Jones FXCM Dollar index perfectly displayed a ‘buy the rumor and sell the news’ pattern during the lead-up and then announcement of a deal to end the government shutdown and suspend the debt ceiling.
In the first half of Wednesday’s NY session, the US Dollar rose to a four day high and US stock markets rallied on rumors that the leaders representing Democratic and Republican Senators had come to an agreement to pass the anticipated bill. However, a little after noon EST, Senators McConnell and Reid together officially announced the deal in front of the Senate, and the US Dollar began its decline.
The US Dollar closed a bit higher than the open by the end of Wednesday’s trading, and the greenback index only declined slightly until the London session start. Then, the US Dollar tumbled to a five month low on news that the Chinese Dagong rating agency downgraded the US from A to A-. Although Dagong is a small agency, the downgrade touched on fears that other ratings agencies will downgrade US government debt, as the next debt ceiling showdown may happen again in February.
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Charts created by Benjamin Spier using Marketscope 2.0
— Written by Benjamin Spier, DailyFX Research. Feedback can be sent to bbspier@fxcm.com .
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.Learn forex trading with a free practice account and trading charts from FXCM.
Source: Daily fx