Currency Trader Andrew Resnick, formerly of Next Capital of New York, told BloggingStocks Tuesday that the elimination of dollar pegs will add to pressure on the dollar.
"The pegs support the dollar to a degree, but the real factors here are the slowness of growth in the U.S. economy, and the U.S. trade deficit," Resnick said. "Until we see those two factors change, the trend is likely to remain dollar lower, across the board."
The trade: dollar-short
Resnick said his positions will remain dollar-short through Wednesday, ending a few trades early, as the hourly indicators reach overbought levels, to take some profits. He plans on maintaining at least one of his five dollar-short positions over the long [U.S.] Thanksgiving holiday weekend.
The dollar fell also against the British pound and the Swiss franc. The pound rose 1.6 cents to $2.0664 and the franc moved to $1.1069 against the dollar, gaining about 1 cent. The dollar was virtually unchanged against the yen, trading at 109.86 yen.
Fed's a factor
Resnick said traders are also concerned about another interest rate cut from the U.S. Federal Reserve when it meets in December.
"There's a belief right now that the Fed has one more interest rate cut in them, given the string of weak U.S. economic data," Resnick. "The equity markets will appreciate it, but another rate cut will not strengthen the dollar, and it's a minor factor in some traders' dollar-short positions now. We just have many economic and other variables that are not in the dollar's favor right now."
Tuesday's dollar selling was fanned by news story in the Saudi al-Riyadh newspaper that Saudi Arabia may have started studying a revaluation of the riyal against the dollar, The Wall Street Journal reported [Subscription required].
Why do we have a weak dollar?
Holiday hiring slow for retailers
Closing Bell: What sell-off? (AIG, ABK, EPR, MBI, JAVA, ORCL, ERTS)
