US dollar strength keeps Euro pair even

Monday December 8, the euro/dollar still remains in a neutral zone with a quote of around $1.29.

The monthly US unemployment figures showed a dramatic loss of 533,000 jobs in November, which were the heaviest job losses since 1974.

As well as this, the unemployment rate rose to 6.7%, which is the highest level since 1993.

Although a severe drop of the US dollar (and therefore a rise of the euro), would be expected, the euro/dollar still stayed in the 'neutral zone'.

The value of currencies are being affected by several factors, such as the difference of interest between currencies. Also the faith of investors in a country and the 'health' of an economy plays an important role.

It is a fact that the US administration injects several billion dollars in the financial system and the US has a debt of several trillion dollars. However, this does not result per se in weakness of the greenback.

Keeping all options open

The strength of the dollar mainly depends on the strength (or weakness) of the US economy.

It is true that the American economy is more flexible than, for instance, the European economic zone. It would not surprise me if the euro and the US dollar some time in future are trading 'at parity'. Nevertheless, I will keep all options open: From a severe break through to the upside (above $1.30) or a big fall of the euro, if the level of $1.23 breaks.

Globex euro/dollar MCH future on Monday December 8th: 1.2901 dollar.

Investors who wish to trade with futures, have two options: To buy or to sell the (heavy) eur/dollar 'EUR' at the Globex with a multiplier of $125,000. This means that one tick represents a dollar movement of 12.5. The other future is the euro/dollar 'E6', which has a multiplier of 62,500 (movement of $6.25 per tick).