Market News

The JPY displayed an increase across all currencies on Wednesday due to investors trimming stretched risk positions in higher-yielding currencies. The stock market also fell following U.S. Data that was weaker than expected.

The U.S. Dollar Index continues to hold its own versus a group of major currencies, trading at 76.130 .DXY, following the 2-week high established yesterday at 76.328 .DXY.

The dollar remained stable and steady on Tuesday after sharp inclines on Monday, but made very small forward progress as investors ceased from selling the euro and other higher-yielding currencies. On Monday, the euro dropped the most since early August, with a close to 1 percent dip.

The U.S. Dollar continued to hold steady in Tokyo trading after seeing sharp gains in yesterday’s trading, gains which resulted from an increase in Treasury yields yesterday to the highest level over the past 2-months, all of which helped to prop up the U.S. currency.

With the issuance of a report out of China suggesting that the central bank should increase their holdings in the Japanese Yen and single currency Euro in their foreign reserves, investors sold off the U.S. currency, driving the U.S. down to a new 14-month trough versus the Euro in Asian trading today.

In advance of the release of economic data from the Euro zone later today, the single currency Euro briefly hit on a new multi-month high before retreating.

The U.S. Dollar Index recovered from recent 14-month lows in Tokyo trading today following the release of information confirming that China’s domestic growth has grown in line with investor and analyst expectation. Third quarter GDP in China rose to 8.9%, and offered traders an excuse for profit-taking on high yielding currencies, including the Australian Dollar and the single currency Euro.

Investor profit taking on high yielding asset-based currencies helped boost the U.S. Dollar in Asian trading today.

In early trading in Tokyo, the Euro rose to its highest level versus the U.S. Dollar since August 2008, trading just shy of $1.5000.

Finance ministers from the Euro Zone will be meeting later today to discuss with Jean-Claude Juncker, the Eurogroup chairman, their concerns about the Euro-zone’s recovery, given the single currency Euro’s recent continued rise.

The USD declined to a low of several months vs commodity-based currencies and the EUR, as comments by policymakers confirmed the opinions that the U.S. interest rates would remain lower for a more extended period of time than those belonging to other large countries. The greenback hit a low of 14-month vs. the EUR as well as the higher-yielding AUD.

Recent comments by U.S. policymakers reinforced investor belief that key interest rates in the United States will remain at historic lows, even while other countries around the globe are hiking their key rates as the recession ends.

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.