Investors Continue to Buy Dollars

Despite the global economic crisis the US dollar has remained surprisingly strong on currency markets including the interbank Forex. Many Forex traders and investors have continued to buy dollars to avoid risk. The dollar remains the world’s reserve currency and continues to outperform the Euro and the Pound.

Dismal US Employment Figures

All that could change because of recent figures released showing a loss of 240,000 non farm jobs, the largest loss in seven years. The US labor market continues to deteriorate and in the last three months the US has lost 651,000 jobs. This recent information sent shock waves through currency markets including the Interbank Forex. Michael Woolfolk, senior currency strategist at Bank of New York Mellon stated; “The report shows the labor market continued to deteriorate at the start of the fourth quarter and we have to keep in mind that it doesn’t yet reflect much of the job losses on Wall Street.”

Risk Aversion Helping the Dollar

U.S. data over the last few weeks has increased the market’s aversion to risk and has helped capital flow back to the U.S. dollar. The Euro was up 0.8 percent against the dollar at $1.2795. Against the yen the dollar slid 0.4 percent to 97.39 yen. Some economists are convinced that the dollar will continue to perform well on currency markets including the Interbank Forex, despite the dismal employment figures of the US.

Dollar Still Currency of Choice in Interbank Forex

Most analysts believe that aversion to risk should help the dollar to continue to perform well and because of the US job data investors will continue to flock to the dollar to avoid risk. The economic situation in Europe continues to deteriorate and for now the US dollar seems to be the currency of choice in both retail and interbank Forex markets.