Risk Appetite Limited on U.S. Debt Ceiling Focus
The U.S. dollar saw gains yesterday after the announcement of Osama bin Laden’s death. However, it soon pared its gains to fall to other currencies. Today, though, the greenback is showing signs of strength again in currency trading.
Today, risk appetite is low as oil prices continue to show volatility, and as financial markets focus on the U.S. debt ceiling. As a result, the U.S. dollar is making gains, falling only to the Japanese yen of the major currencies.
However, it is doubtful whether or not the U.S. dollar can maintain its strength. Some have pointed out that the U.S. debt is rapidly 100% GDP, and that the situation in the U.S. is worse than that of Portugal. Rumors and speculation about what could happen in the event of a default are running rampant, and that could cause problems for the U.S. dollar later.
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