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U.S. Dollar: Is risk appetite here to stay?

Posted on July 16, 2009 at 3:05 in Editors Pick by David Aranzabal

Since the beginning of the week, the Dow Jones Industrial Average has climbed more than 450 points and in that same time, we have seen the U.S. dollar sell off against every major currency except for the Japanese Yen. With earnings season is in full swing, currencies are taking all of their cues from equities. Ten out of the thirteen S&P 500 companies that have reported have surprised to the upside, relieving last week’s fears that the recovery is receding.

The latest moves in the currency market broke the downtrend in pairs such as the EUR/USD, USD/JPY and AUD/USD. As long as Chinese growth does not disappoint and earnings continue to beat expectations, risk appetite is here to stay. However the currency market has proved to be very fickle and therefore this rally is fragile. The U.S. economy is still facing a jobless recovery and if there are any disappointments, the turn could be sharp.

Source: FX360.com

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