US Dollar and Euro: New Week, Same Drivers

It has been a very volatile week for the US dollar, even though compared to the beginning of the week, the exchange rate for the EUR/USD and USD/JPY has remained virtually unchanged. On Monday, the EUR/USD was trading at 1.5922 while USD/JPY was trading at 106.26, not far from current levels, but of course these rates masks what can only be likened to a rollercoaster ride in the financial markets. There was a number of event risks and economic data released over the past week, yet the drivers of the financial market volatility can be boiled down to 2 things; the health of the financial sector and oil prices. We have come a long way since traders first speculated about the possible demise of Fannie Mae and Freddie Mac. The Federal Reserve and the Treasury have offered different solutions to avert more serious problems while... [read full story]