FX.co ★ Dollar Pauses Versus Majors Ahead of Bank Plan Details

Dollar Pauses Versus Majors Ahead of Bank Plan Details

(RTTNews) - The dollar experienced choppy trading versus other major currencies Tuesday morning in New York as traders took a wait-and-see attitude about the Treasury Department's plan for the remaining $350 billion of the rescue package for the nation's financial institutions.

Meanwhile, President Obama said late Monday that the economic crisis facing the United States is the "winter of our hardship," and urged members of Congress to set aside political differences and approve an economic stimulus plan.

In his first news conference since taking office, Obama said the American economy is in a "full blown crisis" that requires government action.

The economic stimulus package passed a key test vote Monday in the Senate, and faces a formal vote of approval or failure on Tuesday. If the measure passes, it moves to a conference committee to reconcile the differences between the Senate and House versions.

The dollar bounced back and forth versus the euro as enthusiasm about the stimulus wavered. The buck rose 1.2820 in overnight dealing, but slipped back to 1.3000 approaching mid-morning.

The pair has seen very choppy trading in February, with the dollar leveling off after hitting a 2-month high of near 1.27 on the first of the month.

French President Nicolas Sarkozy announced a package worth EUR 6.5 billion for the country's ailing carmakers on Monday.

Accordingly, the government will grant a five year loan of EUR 3 billion each to the carmakers Renault and Peugeot-Citroen.

The dollar held steady versus the sterling Tuesday morning, pausing from a two-week downtrend. The buck was at 1.4800 as of 8 am ET, a modest improvement from yesterday's 4-week high of 1.4985.

Tuesday, the Office for National Statistics said that the UK's deficit on trade in goods and services narrowed to GBP 3.6 billion in December from GBP 4 billion in November.

The buck continued to consolidate last week's gains versus the yen, holding near 91.50 in early dealing. The buck jumped to a monthly high of 92.40 last week, as traders expressed optimism that the stimulus plan may jumpstart the US economy.

The Commerce Department is due to release its wholesale inventories report at 10 AM ET on Tuesday. Economists expect wholesale inventories at the end of December to show a decline of 0.6 percent, significantly less than the 7.1 percent decline in November.

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