US dollar is falling today, thanks to upbeat news out of China and Europe. With risk appetite on the rise, there is little demand for the safety and stability of the US dollar. Forex traders are, instead, turning to higher yielding currencies.
US dollar is dropping as confidence makes an appearance in the markets. Germany’s ZEW data surprised quite a bit to the upside. On top of that, borrowing costs dropped in Spain and Greece. This good news has overshadowed continued worries that Greece will default, amidst protests by Greek citizens. The downgrade of the EFSF has also been largely overlooked.
Additionally, even though China continues to show signs of slowing, the country’s economy has slowed as much as expected. So, with China beating expectations, there is another reason for a degree of confidence.
With risk appetite on the rise, the US dollar can’t satisfy the desire for higher yields. As a result, the euro, pound and loonie are all gaining against the greenback (with the loonie getting a little extra boost from rising oil prices). Commodities are on the rise as well, and equities are surging — especially in the United States. However, it’s important that any bad news could bring about a swift reversal, and send the US dollar much higher.
At 16:18 GMT EUR/USD is up to 1.2750 from the open at 1.2668. GBP/USD is higher at 1.5364, up from the open at 1.5324. USD/CAD is lower at 1.0129, down from the open at 1.0178.
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