Dollar Falls as Economy Shows Recovery

The U.S. dollar and the yen fell as signs that the recession could be ending attracted investors back to riskier assets, making the demand for refuge currencies, such as the greenback, to diminish.

The greenback had the second day of losses against the euro on forecasts that a report to be released will show that the U.S. economy contracted at a slower pace in the first quarter while Siemens AG, the largest European engineering conglomerate, had earnings above the expectations, pushing the Eurozone currency up also against the yen. As signs of improvement start to appear in different world economies, risk aversion tends to slowly fade, causing a decrease on demand for the greenback, which is considered, to a certain extent, a refuge investment during the global slump.

The current global financial situation stills far from being calm or adequate, but the analysts affirm that signs of improvement in economic conditions will lead investors to bet again on riskier assets and, even if the short-term future consists of several doubts, positive reports bring confidence back to the markets. It certainly cannot be considered as an immediate and permanent recovery for the global slump losses, but economists indicate that brighter days might be ahead in the next few weeks.

The EUR/USD rose from 1.3005 to 1.3239 while the USD/JPY traded at 96.92 from a previous price of 96.41.

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