By: Barbara Zigah
The U.S. Dollar opened lower against the common currency Euro in New York trading. Investors are exercising caution ahead of the expected announcement from China this weekend of an interest rate hike; earlier today, the Peoples Bank of China announced that it would be increasing its bank reserve requirements by a preliminary 50 basis points.
This rise in the reserve requirements for Chinese banks is the 6th such rise in a year. As reported at 9:35 a.m. (EST) in New York, the common currency Euro was trading against the U.S. Dollar at $1.3219, down .14%.
The U.S. Dollar also lost ground against the Australian and New Zealand Dollars, as investors appear relieved that China only announced the change to bank reserve requirements and not an interest rate hike.
The Australian Dollar was trading at $0.9865, up .4%; the New Zealand Dollar was trading against the greenback at $0.7494, up .3%. Analysts continue to caution, however, that China may still move forward with an interest rate hike, in which case the higher risk currencies, such as the Euro, and the Aussie and Kiwi Dollars, will be under pressure as investors return to the safe haven of the greenback.