US dollar is headed lower, thanks to the return of risk appetite. The news that the ECB will not cut interest rates is helping the euro against the greenback. General risk appetite means that Forex traders aren’t looking for safe haven, and that the US dollar is likely to remain lower for a while.
Greenback is paring some of its losses against the euro with the latest ADP report for August. The news that the private sector added 201,000 jobs to the economy last month is leading to the belief that maybe QE3 isn’t right around the corner after all. Many believe that Ben Bernanke will only pull the trigger if he thinks that the economy needs the stimulus. If the jobs situation is improving, there might not be a need for another round of quantitative easing.
Even with this hope, though, the US dollar remains down overall against high beta currencies. Risk appetite is playing too big a role, and gold prices are surging past the $1,700 an ounce level. With commodities heading higher, and risk appetite on the rise, the greenback just isn’t in demand.
At 12:20 GMT EUR/USD is up to 1.2635 from the open at 1.2600. GBP/USD is up to 1.5924 from the open at 1.5902. USD/JPY is up to 78.7825 from the open at 78.3930.
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