US Leaders Fail to Deliver Hopeful View of the US Economy

Forex trading forecast could be for more dollar strength

As jobs data is mulled over today, currency traders have other things to think about — the lack of optimism from US leaders about the economy. Yesterday, a number of speeches were kind of downers, and that is not providing hope that recovery for the US economy is on the way. GFT’s Kathy Lien recaps some of the lackluster comments about the US economy in FX360:

Unfortunately, Obama, Bernanke and Geithner have failed to enliven the financial markets. Investors were looking for reassuring words from these key players and even though Obama said that it may now be a good time to buy stocks, he warned of more pain this quarter. Bernanke was even more pessimistic as he acknowledged that he should have been more aggressive in fighting the financial crisis because now “significant stresses persists in many markets” and “clearly” the banking system has not stabilized. Geithner was slightly more optimistic as he backed Obama’s fiscal stimulus package but he believes that the US recession is deepening and it will take “some time to fix.”

It is worth noting, however, that the stock market is off to an early rally this morning, in spite of the economic doom and gloom. Whether or not the rally extends will offer insight into whether or not this is just a stock market rally due to bargain hunting or the beginning of something more substantial.

In any case the forex trading forecast for dollar strength will depend in large part on where the US economy goes from here.