US Dollar Resumes Slide
The US dollar declined against a basket of major currencies on Wednesday (Sept. 23rd) hitting a one year low. Currency traders dumped the greenback on speculation that the Fed will keep rates at record lows sending investors in search if higher yielding assets. Tohru Sasak of JP Morgan Chase Bank stated, “Dollar selling quickly spread to a wide-range of currencies as the dollar resumed its slide the previous day. The dollar is vulnerable at the moment as it is around key levels against many currencies, hovering in areas where lots of loss-cut selling orders await.”
Kiwi Continues Winning Streak
The New Zealand dollar resumed last week’s winning streak against the dollar and rose over one cent to $0.7315 the highest since August 2008. Better than expected New Zealand GDP data indicated the economy unexpectedly pulled out of recession territory during the second quarter. The dollar index, or DXY, fell 0.27% to 75.913 after hitting a low of 75.892. The DXY has declined over 2.5% this month as currency traders sold dollars in favor of higher yielding assets.
Aussie at 13 Month High
The Australian dollar rose to a new 13 month high in tandem with the Kiwi dollar. The Aussie was up 0.4% to $0.8769. Rising risk sentiment has pressured the greenback downward a trend many experts expect to continue. Jonathan Cavenagh of Westpac said, “It is a bit odd that the kiwi is leading the rally in the majors, but it just tells us about the sentiment and the risk reversal that has taken place. The broad theme is U.S. dollar weakness, and we must say it is looking ugly technically too.”
Dollar Falls vs. Yen
The dollar vs. yen fell 0.4 % to 90.72. Forex traders said that many stop loss orders were set for around 90.90 making the decline sharper. An unnamed forex trader at a Japanese bank stated, “Regarding the dollar/yen, we thought stops had been cleared out after the pair fell near 90 yen many times last week. But moves this morning showed there were some more out there. Also, speculators really want to push down the greenback, even against the yen.”
This week currency trading is expected to be driven by the FOMC meeting and the upcoming G 20 summit in Pittsburgh.
