The US dollar index reached a three-month high during the session today, thanks in large part to risk aversion. However, the latest minutes from the recent Federal Reserve meeting are also helping the greenback.
Risk aversion is one of the stories today, thanks in large part to the latest economic data out of the eurozone. Also not helping the risk situation is the fact that unemployment claims in the United States rose again. With economic data pointing to continued hiccups in recovery, it is little surprise that safe havens are of interest.
Also helping the US dollar index post its biggest one-day gain in seven months is the fact that the Federal Reserve might dial back some of its quantitative easing efforts. The minutes from the latest FOMC meeting indicate that there might be a withdrawal from the recently-implemented program of purchasing $85 billion a month in Treasuries in an effort to help the economy. With stimulus efforts decreasing, that should take away one of the causes of dollar weakness.
For now, these combined factors are resulting in dramatic gains for the greenback.
At 17:56 GMT the dollar index is up to 81.303 from the previous close of 81.069. EUR/USD is down to 1.3202 from the open at 1.3282. GBP/USD is a little higher at 1.5257, up from the open at 1.5234. USD/JPY is down to 92.9055 from the open at 93.5720.
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