By TraderVox.com
Tradervox.com (Dublin) – The greenback dropped against most of its major peers as risk appetite rose in the market. This was triggered by the Germany’s support of the European Central Bank’s decision to incorporate bond-buying into its efforts to fight debt crisis in the region. The US dollar fell against the yen as a report from the Bank of Japan signaled that the bank may refrain from additional stimulus when they meet this week. The New Zealand dollar rose against the US currency as stocks rose. The Standard & Poor’s 500 Index reached its highest level since May.
According to Michael Woolfolk, the risk-off trading environment is diminishing and investors are comfortable holding higher yielding assets. Woolfolk, who is a Senior Currency Strategist at Bank of New York Mellon Corp in New York, added that the market is already very short euros and overly long dollars. However, the Australian dollar has remained unchanged at $1.0569 as investors wait for the Reserve Bank of Australia decision tomorrow. The market expects the RBA officials to keep the interest rates at 3.5 percent as the economy seems to savor through the current turmoil. The Standard & Poor’s Index rose by 0.6 percent while the MSCI World Index of stocks increased by 0.9 percent.
The greenback dropped by 0.3 percent against the yen to trade at 78.25 at the close of trading yesterday in New York, while it declined by 0.1 percent against the euro to exchange at $1.2401; it had dropped earlier by 0.5 percent to trade at $1.2444, which is the weakest it has been in a month. However, the euro was down by 0.2 percent against the yen to trade at 97.03 after it touched 97.80, its strongest since July 2. The New Zealand dollar rose against the greenback to exchange at 82.24 US cents. This is its strongest since April 30. The kiwi then dropped slightly to trade at 0.1 percent up at 82 cents.
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