Dollar at Two Week Low vs. Euro
A slight rise in risk appetite has affected many currency exchange rates. The dollar was at a two week low against the euro. Presently the euro to dollar exchange rate is $1.3328 a 1.3% loss against the dollar. The Japanese Yen fell against all major currencies as investors bet that the worst of the global recession is over. The euro to yen rate fell 1.9 percent to 129.17 per euro.
Higher Yielding Currencies
Other exchange rates affected by the rise in risk sentiment include the Australian, Canadian, and New Zealand dollars and the Norwegian Krona. US dollar exchange rates were also affected by a report which showed a drop in US GDP. The US economy declined by 6.1% in the first quarter of 2009 a larger than expected drop. The Kiwi dollar gained 3.2% against the US dollar and 3.8% against the yen.
Euro to Dollar Volatile
The euro to dollar exchange rate has a long history of volatility. In early March the dollar fell 3.4% against the euro as investors bet that the decision by the Federal Reserve to purchase $300 billion in Treasuries would hurt the dollar. The drop was the largest since the introduction of the euro in 1999. The dollar has gained 1.2% since early March.
Pandemic Fears Affect Currency Trading
Earlier in the week concerns about a possible swine flu pandemic helped the dollar to euro exchange rate as safe haven demand rose. The WHO raised its pandemic alert but did not recommend any border closings or travel restrictions. Concerns about the health of US banks also affected currency exchange rates earlier in the week. Investors and forex traders are awaiting for the results of US banks ‘stress tests’ due to be released early next week.
Investors Watching ECB and Fed
Other factors expected to affect currency exchange rates include the results of the ECB meeting and any change in policies by the Federal Reserve. In the coming week forex investors and traders will have several sets of economic data to sort through all of which can affect global currency exchange rates.
