NEW YORK (Forex News Now) – In early forex trading news today, the U.S. dollar index took a beating, reaching a new low for 2010 at 76.259, while Singapore and Australia both showed strength in their respective currencies.
The U.S. dollar index, which tracks the value of the dollar versus a basket of major currencies, fell by 1 percent at its deepest point to 76.259. This is the lowest mark reached since last December. The index appears to be on a downward trendline, heading to a support level of 75.95. This would put the index close to the 74.71 mark reached last November.
The move comes as investors continue to flock to other currencies backed by higher yields and more stable economies. The Aussie in particular has surged, soaring to a 28-year high at $0.9994 today, up 11% in 2010 and 24% from a low point this past May.
The resurgence of the Aussie is an interesting case study in the dynamics of global currency today. The Australian economy was the first to raise interest rates in the developed world following the global recession, and has shown strength while other economies – namely that of the United States – have continued to demonstrate systemic weakness.
Of course, the Aussie has encountered resistance at parity, with options barriers at $1.0000 blamed for the slight retreat of the rally. With that being said, as long as the dollar continues to depreciate, the Aussie will continue to rise until the psychological barrier of parity is broken.
With the pending stimulus actions in play for November, that may happen sooner rather than later.
The Singaporean dollar also advanced due to forex trading news after the Monetary Authority of Singapore declared it would maintain “modest and gradual appreciation” in its currency. Currently, the dollar trades at S$1.2888, and is down -0.46% on the day.
Looking at Singapore is another example of an economy at the other end of the spectrum from the economic situation in the United States. Singapore, a slight net exporter of goods, has experienced an estimated 10.3% of year-on-year GDP growth in the third quarter, and remains on track for a positive growth forecast for 2010.
U.S. investors will still be driven primarily by forex trading news coming from major partners, such as Japan. Today’s fall of the dollar index places even more pressure on the Bank of Japan to act, since USD/JPY is currently down 0.4% at 81.46.
While this mark is up from the day’s low of 80.88, it still will prove to be an influence on the dollar throughout the week.