Forex Market Booms on Back of S&P Downgrade

In what has been described as the most crushing day for US stocks, the Dow Jones Industrial Index fell 635 points on the back of the S&P downgrade of US creditworthiness. The news has sent shockwaves around the world with international markets registering major losses in dollar-denominated interests. It has also sparked activity at forex trading sites online.

The currency exchanges in the forex markets have registered steep depreciations in dollar values worldwide and many key industry players have been able to benefit from the anticipated dollar selloffs.

Major market power players shifted their attention to gold stocks and the precious metal soared on the back of plunging dollar demand. The current weakness in the US economy is the result of multiple factors, namely the failure to agree on the debt ceiling between Republicans and Democrats, the massive US deficit and an ailing economy which has yet to post positive results domestically.

Stay in the Know with eToro

In times of global uncertainty, many key players are looking at Forex-related sites to benefit from the chaos in international currency markets.

eToro for example is offering traders up-to-date information on how best to leverage their options by way of US Treasuries (these maintained their safe haven status despite the S&P downgrading).

The news is worsened by the massive bailouts required for the Spanish and Italian markets. These crises do however present wily industry players with plenty of opportunities to pick up cheap stocks and other commodities. Foreign importers benefit from weakened dollar exchanges and US interest rates may be raised to attract foreign investment.