Good day forex traders.
Welcome to another review of the US Dollar Index and US debt. We last visited on Jun 11 and back then the American economy was suffering the threat of a slow down. Furthermore the Euro Zone deficit crisis was showing signs of further degradation and Greece was facing possible default. Risk aversion
was probably creeping back into the financial markets.
Looking at the US Dollar Index chart above, we noted that risk aversion
did strike as we faced a spike in US Dollar strength from Sep to Oct. This was probably mainly due to the worsening conditions in the Euro Zone as various Euro countries had various views towards the optimal solution for the Euro Zone budget deficit crisis. Likewise when concrete solutions started to be a possibility come Oct, the US Dollar weakened as risk appetite improved. This highlights an interesting fact. The US Dollar remains a choice during times of risk aversion
despite the recent downgrade of credit ratings and it’s troubled economy.
On 23 June 11, the total public debt is 14,344,503,407,708.93
As of 26 Oct 11, the total public debt is 14,937,008,744,814.46
Source : TreasuryDirect
The US debt has increased.
The US economy remains plagued by a weak outlook. Unemployment is still high and the housing market remains weak. The housing crisis is still very much alive as owners continue to seek for their homes affordable refinance programs.
From a technical point of view, we may be targeting the 74 region which therefore suggests the possibility of more US Dollar weakness to come.