US dollar is gaining ground right now, thanks to fading risk appetite. Earlier, risk appetite pushed Asian stocks higher, and helped high beta currencies. Now, though, risk appetite is fading and Forex traders are turning to the safety of the greenback.
Earlier, with the help of a higher S&P 500, and thanks to optimism about Europe, high beta currencies had the upper hand. However, that risk appetite is fading fast as traders wonder about the effectiveness of the EU summit, and as concerns about when Prime Minister Mariano Rajoy will ask for bailout help from the European Stability Mechanism.
It’s also not helping risk that Morgan Stanley just booked a billion dollar loss in Quarter 3. On top of that, the latest Chinese GDP data, showing 7.4 per cent, is indicative that the economy is still slowing in the world’s largest emerging market economy. All of this is leading to a breather for the recent risk rally, and boosting the US dollar.
At 12:50 GMT EUR/USD has slipped to 1.3102 from the open at 1.3121, and is off the session high of 1.3130. GBP/USD is also lower, dropping to 1.6138 from the open at 1.6149. GBP is off its session high of 1.6172 against USD. USD/JPY is a little higher, though, moving up to 79.3000 from the open at 78.9345.
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