Risk Appetite Pressures US Dollar
Better than expected data from the US triggered a rise in risk sentiment among currency traders putting pressure on the US dollar and the Japanese Yen which are traditionally seen as safe haven currencies during troubled times. The euro to dollar rate was affected as the dollar fell against the euro for the fourth straight trading session. The yen is at a two week low against both the dollar and the euro.
Investors Wait For US bank Stress Test Results
Currency trading is expected to be light in advance of the May Day holiday celebrated in both Europe and Asia. Many investors remain cautious in advance of Monday’s results of US bank stress tests. The Australian and New Zealand dollars were the biggest winners in forex markets. US stocks rose on Friday also affecting currency exchange rates globally.
US Manufacturing Increases
Data showing a rise in US manufacturing and increased consumer confidence also affected both the euro to dollar and yen to dollar exchange rates. Wednesday’s positive statements by the US Federal Reserve raised investor confidence. The Fed will leave rates at 0.00% to 0.25% and said that economic contraction is slowing. The Fed also noted problems with credit markets which are having an adverse effect on business.
Fridays Exchange Rates
The euro to dollar exchange rate rose 0.3% to $1.3258 and the euro to yen rate reached 132.33 up 1.2% from Thursday. The dollar to yen exchange rate rose 0.7% to 99.46 after reaching a two week high of 99.58. Both the Aussie and Kiwi dollars made significant gains against the US dollar. The Australian dollar rose 0.7% to $0.7304 while the Kiwi rose 0.8% trading at $0.5693.
Pandemic Concerns
Also affecting currency exchange rates are concerns about the health of the US banking sector and the results of US bank stress tests are due Monday. Concerns about the possibility of a flu pandemic affected currency exchange rates earlier in the week. Some analysts believe that negative results of US bank stress tests could trigger a return to risk aversion.
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