Market News

The EUR reached a 14-month high vs the USD in Asia Wednesday as a result of the broad greenback weakness. This weakness was a result of growing expectations that the Federal Reserve is going to keep interest rates low for at least the upcoming year.

Continuing investor doubts about the direction of interest rates in the United States has whetted investor appetite for higher risk currencies and caused the U.S. Dollar Index to fall to a new 14-month low in Asian trading today.

The U.S. Dollar continues to struggle to make headway against other major currencies while market players take a wait-and-see stance ahead of the release of economic data from the U.S. and Germany.

With investors covering their short positions versus the Yen, the U.S. Dollar edged up slightly in Asian trading today, continuing the gains made late last week.

As reported at 11:19 a.m. (GMT) in London, the U.S. Dollar continued to weaken in Thursday trading following better than expected jobs data from Australia, which helped to prop up the AUD.

The U.S. Dollar continues to be on the defensive in Asian trading today, following the rumor of a report suggesting that several oil-producing countries within the Gulf States are pushing for currency diversification away from the U.S. currency.

As widely anticipated by many analysts and investors, Australia’s Reserve Bank raised a key interest rate by 25 bp to 3.25% today. Thus the RBA becomes the first central bank within the G20 to acknowledge the easing of the global fiscal crisis. As a result, the Australian Dollar rallied to $0.8876 versus the U.S. Dollar, a 14-month high. Also profiting from the RBA’s decision, the New Zealand Dollar rose to $0.7357, also a 14-month peak. An FX distribution manager in Tokyo suggested that while there may be some profit-taking in the next few days, over the longer term, the Australian Dollar will continue to gain.

Disappointing jobs data released by the U.S. Labor Department last Friday precipitated the U.S. Dollars continuing decline versus major currencies.

Before the expected release later today of non-farms payroll data from the United States Labor Department, the U.S. currency traded flat versus a group of six major currencies.

The U.S. Dollar moved up versus the Japanese Yen in Asian trading today as institutional investors sought to fund their overseas investments through the purchase of the greenback.

The Australian Dollar hit a 13-month high versus the U.S. Dollar as better than expected retail sales data from Australia provided mounting evidence that an interest rate increase could be forthcoming before year end. Speculators believe that, as early as November, the Reserve Bank of Australia will likely move to increase key interest rates.

Hirohisa Fujii, the Finance Minister for Japan, recanted earlier statements about the Japanese government not intervening in a strong Japanese Yen.

Conflicting comments by the Japanese Finance Minister lead to the Yen’s rise and fall in Asian trading today.

A draft communiqué to be issued by the G20 leaders is promising that they will keep current emergency measures in place in an effort to shore up the global economies until such time as the recovery is solid.