The dollar crumbled today after Barack Obama failed to convince investors that he was serious about reducing the record deficit in his State of the Union Address last night.
Forex Hound reported:
The U.S. Dollar fell against the major currencies after President Obama, during his State of the Union address, failed to convince executives and economists that he’s serious about controlling the U.S. budget deficit.
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Although Obama did propose a partial freeze on government spending, many participants at the economic summit in Davos, Switzerland still felt the U.S. is lagging their foreign counterparts in cutting a record budget deficit of more than $1.2 trillion.
The opinions on Obama’s speech ranged from “There is an unwillingness to deal with the real gorilla in the room” according to Martin Sorrell, chief executive officer of advertiser WPP Plc to “We need a heck of a lot more action on it” and that Obama’s speech “lacked details” from James Turley, CEO of Ernst & Young LLP.
The major criticism is that the record budget deficit is one of the biggest risks to global economic growth. As it stands, the U.S. budget deficit is almost double the average in the Euro region. Borrowing costs over the past year have surged leading many experts to conclude that the budget deficit is unsustainable.
The AP added that the ledger did not appear to be adding up Tuesday night when President Barack Obama urged more spending on one hand and a spending freeze on the other.