The US Dollar reversed its downward trend on Thursday after Federal Reserve members downplayed the fall of the US currency in the past few months by reminding investors that deflation is still a real threat. The Fed cited the falling prices in the US commercial real estate in their defense of not raising interest rates at this time – a move that is widely seen as keeping the Dollar down for now. Money flows switched hands from the equity markets, which have been on a sustained rally in recent weeks, to the USD as well as the Japanese Yen, the two primary safe-haven currencies. Weakness in the technology sector and a sharp drop in health related stocks attributed to the progress being made on US healthcare reform helped sink stocks Thursday as risk appetite showed its first signs of waning in three weeks.
At 11:00 PM GMT, the US Dollar was up .32% to the Euro to 1.4915, up .6% to the British Pound Sterling to 1.6654, up .9% to the Canadian Dollar to 1.0634, up 1.05% to the Australian Dollar to .9194, up 1.96% versus the Kiwi to .7311 and up .35% to the Swiss Franc to 1.0132. The Dollar did fall today against the Yen by .35% to hold in at 89.01.
The ICE Futures US Dollar index which measures the performance of the Greenback against a basket of six currencies rose by .2 percent to 75.36. The index had bottomed out to a 15-month low of 74.679 earlier in the week.
The 200-day moving average was the big focus of the day due to the number of times this level has served as a key pivot point in the past. If risk continues to adjust lower here and bond yields remain low or even drop further, we could see a move below the Moving Average and even a try at the lower end of the longer term range.
Written by Finexo.com