Fall of the oil of $6 a barrel and “carry trades”, the dollar benefits from it

[RTFXtrading]

The initial reaction of the market following the news regarding the bankruptcy of Lehman Brothers was to sell the dollar. The dollar fell to 1.4481 against the euro, 1.1058 against the Swiss franc, 104.54 against the yen and 1.8128 against the pound sterling.

However, the turmoil that the bankruptcy of Lehman Brothers and the repurchase of Merrill Lynch caused an effect of panic on the worldwide markets, the market unwinds the long “carry trades” positions, this caused the fall of the currencies with strong yield like the Euro, the Pound Sterling and the dollars New Zealand and Australian, whereas the currencies with low yield like the yen, the Swiss franc and the dollar benefit from it.

The dollar is also supported by the fall of oil, a fall of $6 a barrel at $95. The fear of the repercussions of the aggravation of the financial crisis on the economy and the world oil request pushes the market to sell oil. The oil market reacts to the financial seism caused by the problems of the American investment banks, the market takes refuge now on the obligations and gold.