Forex Blog: Currency Trading News & Analysis.

December 15th 2005

Forex markets shrug off US budget deficit

There is currently a fierce debate in the US Congress over the future of American fiscal policy. This debate has taken on a new significance as some projections for this year’s budget deficit exceed $400 Billion. Thus far, the bond markets and forex markets have largely ignored the prospect of a larger-than-expected budget deficit, as treasury yields and the USD have remained stable. The consensus is twofold: first, the budget deficit will continue to play a backstage in currency markets to the trade deficit and other economic indicators. Second, as long as foreigners continue to purchase US Treasury Securities, the budget deficit will remain a moot issue. CNN reports:

If bond yields and the value of the dollar move this week, according to economists, it’s more likely to be because of signals from the Federal Reserve, or a Consumer Price Index report that shows inflation dramatically better or worse than current forecasts.

Read More: Markets and the deficit: No fear

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© 2004 - 2024 Forex Currency charts © their sources. While we aim to analyze and try to forceast the forex markets, none of what we publish should be taken as personalized investment advice. Forex exchange rates depend on many factors like monetary policy, currency inflation, and geo-political risks that may not be forseen. Forex trading & investing involves a significant risk of loss.