US confidence test

The dollar dipped to a low of 1.2265 from the Euro in Asian trading Thursday before Regaining to 1.2210 in Europe.

There have been growing anxieties over hurricane Rita and those anxieties are liable to grow in the brief term as the storm had been upgraded to a egory 5 hurricane in New York. This is the maximum class on the scale and the storm is among the most powerful. There is the probability of damage along with capacity in Texas, and refineries are closed in anticipation of the storm. Even though the flood threat should be less acute there'll be fears over harm to the market, and consequences will be even monitored by markets.

Surge in energy costs danger sustained damage to the economy when business confidence threatens and could hurt consumer confidence. A recession in spending and confidence will make it harder for the Fed to continue its tightening policy and increase the risk that markets will be inclined to center on the voice in the September Fed meeting. In the brief term, the Fed will want to make sure that inflation will want to boost interest rates and doesn't grow. Yield concerns will offer a few dollar assistance, but the buck is not likely if there's a mix of inflation and growth to benefit. Within this environment, US asset costs will be answerable to weaken and this could pose a test of market confidence in the usa currency.

Analysis provided by http://www.investica.co.uk