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The greenback has extended its losses against the EUR and the Pound for a second day after U.S. President-elect Barack Obama’s pledge to spend more on infrastructure. The assurance may have prompted investors to reduce holdings of safe-haven Dollars and take on more risk which reduced the currency’s risk haven appeal. The Dollar traded at $1.2963 per EUR yesterday in Tokyo, after dropping 1.9% and touching $1.2964, the weakest level since November 27. The USD also weakened 1.5% versus the GBP to $1.4915 yesterday; as investors were trending towards higher-yielding assets. A Democratic $15 billion rescue plan for the three U.S. automakers has also spurred global risk appetite, pushing the Dollar even lower. Hopes for a bailout gained traction on Friday after data showing the U.S. economy lost half a million jobs encouraged U.S. lawmakers to act. The Congressional Democrats said on Monday they had sent a $15 billion auto sector rescue package proposal to the White House for consideration and a deal could be agreed upon in the next week or two.

Global investors have apparently taken a significant degree of solace from Congress’ apparent move towards a bailout of the auto industry and President-elect Obama’s commitment to an economic stimulus package. This may have helped the Dollar gain ground against the JPY, rising 1% to 93.73 Yen. The U.S. President-elect Barack Obama also said on Saturday that his plan to create at least 2.5 million new jobs included the largest infrastructure investment since the 1950s and a huge effort to reduce the U.S. government energy use. Analysts do not expect the Dollar to continue losing ground; however, major concerns remain about the possibility of a deep global recession, which may keep investors wary of taking on too much risk.

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The greenback is keeping its relatively high rates against the major currencies despite a sequence of negative data. The EUR/USD is mostly traded around the 1.2700 levels and the USD/JPY is testing the 92.00 level.

Even extremely concerning data regarding the employment situation in the U.S failed to drop the USD. The Automatic Data Processing (ADP) organization published its Non-Farm Employment Change forecast yesterday. The figure released predicts that an additional 250,000 individuals will have filed for unemployment for the first time in the U.S during the month of November. In normal times, such a result would have had a devastating effect on the Dollar; however, now investors seem to be oblivious. It should also be taken under consideration that in October alone 240K people lost their jobs and the continuation of these results is a clear sign that the U.S economy is far from pulling out of this recession. It may even be extending its poor outlook on a daily basis.

Also yesterday, the Institute for Supply Management published that the Purchasing Manager’s Index has dropped to 37.3 points, making it the fourth drop in a row since August.

As for today, the leading U.S. data will be Unemployment Claims. The survey is expected to claim that 540K individuals have filed for unemployment insurance for the first time during the past week. Such a result will be a direct continuation of the recent troublesome figures delivered lately from the U.S. economy and is threatening to hurt the USD. Traders should keep notice of the developments in the Euro-zone as well since an interest rate cut is expected. This will probably have the biggest impact on the leading currencies.

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