The U.S. Dollar retreated today against the Euro, while the low-yielding Japanese Yen fell as a result of easing in risk aversion following China's announcement of a huge economic stimulus plan which boosted share prices.
Shares in the European markets rose by 3% in early trading in London, tracking increases in equity markets in Asia. This supported higher-yielding currencies, including the Euro and the AUD (Australian Dollar).
Yesterday, China announced an economic stimulus plan worth nearly $600 billion. This marks the beginning of what appears to be the first in a series of potentially huge spending and/or interest rate reductions in order to curb recession in many countries.
On November 10, 2008 at 08:54 GMT, the Euro rose by 1% against the U.S. Dollar to $1.2870. The Japanese Yen fell, pushing the U.S. Dollar up by 0.9% at 99.15 Yen, while the Euro rose by1.8% to 127.60 Yen. The Australian Dollar rose by 2% against the U.S. Dollar, and climbed by 1.2% against the Japanese Yen.
Financial officials from the G-20 meeting this past weekend in Brazil said that they will take all the necessary actions to ensure that the financial markets get back to normal and as a result, higher-yielding currencies were boosted.