Risk Appetite Pressures Dollar
The US dollar fell to a one month low against a basket of major currencies as positive data from Goldman Sachs and Intel bolstered forex investor and trader optimism about the direction of the economy. Other data showed that some factories in New York State showed signs of recovery lifted risk sentiment and put downward pressure on the greenback. Brian Dolan of Forex.com stated, “Intel’s earnings got things kicked off yesterday, and the U.S. data just improves the outlook, so all lights are flashing green for investors to take on risk.”
Investors Bet on Corporate Earnings
Currency experts said that investors are betting that other US corporations will post solid second quarter earnings. Steve Barrow of Standard Bank in London said, “The market may be expecting more pleasant surprises rather than unpleasant surprises from earnings.” This week results are expected from approximately 30 US corporations. JPMorgan Chase & Co will post results on Thursday and Citigroup Inc and Bank of America Corp will post earnings on Friday.
Euro Trades at $1.41
One indication of revived risk appetite was data from Bank of New York-Mellon which showed that the euro was the most bought currency on Wednesday. The euro had been pressured by recent risk aversion. The euro was up 1% on Wednesday at $1.4104. Some traders believe that euro bond redemptions may limit gains for the euro. 60 billion euros worth of bond redemptions are due this week with 36 billion euros due Wednesday. Antje Praefke of Commerzbank in Frankfurt stated, “If funds from those redemptions go back into euro assets, it won’t be an issue, but if for example some of it goes back to Japan, euro-yen may fall.”
Canadian Dollar Up Against US Dollar
The Canadian dollar reached a one month high against the US dollar. The Loonie rose 1% against the US dollar for a one month high of C$1.1185. The commodity based Australian dollar also rose 1% against the greenback. Many currency experts expect volatile forex trading for the rest of the week.
