Heavy Stock Losses Push USD Forex Market Higher

• Safe Haven Dollar Demand Returns 
• Euro and Pound Give Back Gains
• Stocks Continue Lower Following Big Sell-Off

The US Dollar forex market regained strength on Tuesday and early into Wednesday as the lack of confidence in the stock market drove traders back to the safe-haven Dollar. The Dollar Index pushed back toward 104.00 with traders in search of security. This move has damaged recent positive progress from the Euro and Pound which have both retreated as a result. The primary cause of these mid-week moves has been the mass sell-off on Tuesday which drove the main indices on Wall Street toward bear market territory.

Dollar Returns Higher in Rattled Market

Market confidence is at a low this Wednesday with those forex trading anything but the Dollar looking for a path back to safety. They have pushed the Dollar back up in strength after a beginning to the week that had seemed the most positive in recent weeks if not months. There was little in the way of other surprising data to preempt the move with Treasury yields staying relatively stable. 

There will be more news later in the day on inflation with Minneapolis Fed President Neel Kashkasi set to deliver a speech on the issue. Also, today will see the release of weekly job claims data in the US and the Federal Reserve Bank of Philadelphia’s Manufacturing Survey to round out the important notes on the docket on that side of the Atlantic.

Other Major Currencies Retreat

Where the Dollar is very strong on one side, it typically has consequences for other major currencies in the market. Forex brokers have witnessed a quick turn back to weakness from both the Euro and Pound. While both had gained positive ground and some momentum in recent days, they are moving in the opposite direction this mid-week. The Euro is back below 1.05 against the USD at least for the moment with policymakers seeming to suggest a rate hike is imminent.

The Pound also gave up ground to move below 1.24 but has since bounced back above that mark. The main driving force for both currencies will remain risk perception and how the US Market responds later in the day. 

Bear Market Near as Stocks Tumble

Wall Street saw a major dip yesterday. All three of the major US indices experienced an extremely difficult day, all three booking big losses. Chief among these was the Dow Jones which tumbled more than 1,000 points, its biggest one-day loss in over two years. Both the Nasdaq and S&P 500 also dived with the latter close to bear market territory.

The early hours trading has not worked out a great deal better for any of the major averages. The DJIA and S&P continue to fall while the tech-heavy Nasdaq bucks the trend. Target has hit with huge losses yesterday after disappointing reports rocked the retail giant and seemed to have an impact on the overall market.