The Forex market today posted that the Euro is now higher than the dollar.
This is due to the fact that the jobs that were created in the United States were slightly lower than what is needed for the stimulus package to not be needed anymore. The stimulus package was created a few years ago to boost the United States economy. When the stimulus package is no longer needed at all it means that there are plenty of jobs for the people who wish to have one. This is not the case yet as the jobs currently available in the market grew but not enough to get rid of the stimulus package all together. So of course forex traders and brokers are watching this to see if it actually develops into a change in the economic realm in the United States. If the stimulus package does go away you can bet that the forex traders will probably not be buying the dollar as much as other currencies for a while until the numbers match up with the release of the stimulus package.
The only way Forex can determine if the right number of jobs is created to get rid of the stimulus package is hard to find anywhere online.
There is no magic number for the stimulus package to be able to come to a close. Instead the United States government usually just announces that they are going to close or end the stimulus package based on the job growth that is currently happening during that time period. They can end the stimulus program at any time even if the job market is not where it is supposed to be at for the economy to fully recover. This will not only impact the local economies of the United States and the federal economy but it will also affect the forex currency exchange rates on the dollar. It would bring up the other currencies and the dollar would either stay the same or go down slightly in the forex daily charts depending on the decision that the United States government makes regarding the stimulus package that is still currently in the economy.
Why would the other currencies increase in value due to the forex rates on the dollar?
The other currencies would increase in value in the forex market due to the fact that the dollar would go down. This would happen because the other countries who are trying to improve their economies either through programs or a stimulus package such as the Euro would then take the lead away from the dollar. The stimulus package or programs is what would make the difference is that they are still in play in their countries and it is supporting the different economies in the Eurozone. The dollar would decrease in the forex charts because there is no stimulus package anymore as stated in the previous paragraph.
What should the United States government do when it comes to the Forex and the Stimulus Package?
The United States government should wait until the job numbers are increasing to the point of surety of the recovery that is slowly beginning to occur in the job market. This means that they should even wait until a few months after the job market picks up to just make sure that is a real recovery instead of just announcing that the stimulus package is going away now or at a magic number that they made up at the time. If they do this then the forex market will recognize that the United States government is sincere in making sure that the economy and the job market has fully stabilized or recovered from the recession. This will help the dollar in the forex market stay at the current exchange rate and thus it will not end up decreasing in value. It might even become on par with the Euro for the currency exchange rates that they both experience.
This would be good news for the forex traders for who hold the dollar or who are trying to trade their currencies in for the dollar or to sell the dollar for a profit. Because then they will be able to rely on the true nature of the recovery of the job market and the United States economy. That is what all forex traders and forex brokers are looking for in the foreign exchange market these days is a sense of stability when it comes to the different currencies and their exchange rates on the forex market. So naturally they are looking for the numbers that say the economy is on the recovery and that means that the jobs numbers when they are released have to say that they match up with the estimate or are slightly higher not lower.
In summary the forex market is looking for the jobs numbers to match up or be slightly higher than what is announced. If the stimulus package ends before the job market is fully recovered then it will hurt the dollar and you will see this reflected on the forex market with the dollars currency exchange rate. The Euro still has a stimulus package in play in their various economies and this means that the different countries governments are trying to improve the economy and that the system seems to be working at the time. That is why you are seeing that the Euro is slightly higher than the dollar right now on the forex daily charts. Now if the United States government postpones the end of the stimulus package then you will probably start to see the dollar go back to where it was on the forex daily charts and the value will either stay the same or increase slightly in the foreign exchange market when it comes to the dollar’s currency exchange rate. If the government wants the exchange rate to stabilize they will need to show that they are serious about the economy and to leave the stimulus package where it is until the numbers match up with what is predicted or even slightly afterwards the recovery to just be safe.