The Dollar Drops and Stimulus Viewpoints Help to Raise Investor Risk Levels

The dollar saw a strong showing Tuesday, but Wednesday was not the same as a sudden drop outlined by Chinese interest rates, and Fed bond plans leave it weary.
 
Oct. 20, 2010 - PRLog -- BARCELONA- The dollar, which had a strong showing Tuesday, saw a stark and sudden drop moving into Wednesday’s trading day as investors took into consideration China’s interest-rate increases and took the news as a chance to accept and possibly capitalize on the risk it may have.

Steven Halls, a research analyst at Earle Carlton Hughes Financial (ECH) noted that “the dollar was in a progressive movement putting it in the red throughout New York’s trading day even as German Chancellor Merkel condemned stimulus spending and plans of the Federal Reserve on upcoming bond purchases.”

The news of the Feds plans and the strong resurgence of investor confidence as it pertains to the euro only help to support the European recovery which has seemed shaky and lacking confidence from the turbulent U.S. economy.

The dollar plummeted to a 15-year-low when placed against the yen, but recovered minimally. The euro saw an upturn from Tuesday’s trading standing 1.8% above the $1.39 spot.

The U.K. pound found itself settling at $1.5857, which was up from its $1.5697 position Tuesday.

“The turnaround from Tuesday’s lows shows investor confidence and is an indication of strength from the Chinese interest rates. A mere hint of Chinese growth has investors increasing risk appetite, and gives them a reasonable reason to veer away from their sure bet of the dollar” said Halls late Wednesday.

The Australian dollar also saw price improvements, gaining 2% Wednesday, as currency markets across the board rallied into more positive figures.

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Source:Stephen Jacobson
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