Dollar Falls against Most Majors; Risk appears to be Back On
The U.S. Dollar fell against most major currencies in overnight trading as investor appetite for risk increased while tensions over Irish debt issues eased. Pressure increased on the Dollar amid optimism that a bailout for Ireland will prevent contagion across the Euro region’s debt markets.
U.S. Dollar falls Against All Major Currencies on Stronger Economic Reports
Dollar Falls after Private-Sector Hiring Disappoints
The Euro tumbled to a new low for the year after Spain’s debt was downgraded to AA. Traders initially sold off the Euro in a knee-jerk reaction, but selling pressure quickly dried up. Although the Euro reached a new low for the year, the selling pressure was not as intense as Tuesday’s reaction. This was because investors had already discounted the possibility of the downgrade.
The U.S. Dollar finished down against most major currencies. From the start it was under pressure as trader demand for risk pressured lower yielding currencies. The early morning weakness in the Dollar helped to drive up demand for high risk equities and commodities. Tuesday’s move by the Fed to leave interest rates unchanged for a prolonged period of time set the tone for today’s weakness.
The Dollar is trading higher overnight as traders await key economic reports and tomorrow’s Federal Reserve Open Market Committee meeting. Overnight, traders are reacting to less demand for risk on concerns over a Greek bailout and a debt cut for the U.K.
Key reports today include Empire State Manufacturing, Treasury International Capital and Industrial Production.
Euro Falls as Uncertainty remains over Greek Bailout Package
The Euro was under pressure throughout the New York session as uncertainty over the Greek bailout package encouraged more selling. Downside momentum dried up as the market approached last week’s low at 1.3443. This triggered a late session short-covering rally which helped erase close to half of its losses.
Euro Falls on Profit-taking; Investor Focus Shifts to U.S. Economic Data
The U.S. Dollar is gaining back a little of yesterday’s loss in light, overnight trading. Volume continues to be down because of the week-long Chinese holiday celebration. Investors seem a little reluctant to take on risk ahead of today’s U.S. economic reports. Early in the session, traders will be focusing on U.S. Housing Starts and Industrial Production Reports.