Dollar flounders – its biggest hit in 12 weeks
Despite the fact that wide-ranging market circumstances are not favorable for maintaining the trends of US equities, as a benchmark for risk appetite, have floundered, the dollar has nonetheless suffered, its biggest hit in 12 weeks. From beginning to end on Tuesday’s close, the greenback took one more extraordinary stumble and consequently shifted its drive. Traders noticed that the benchmark broke the floor of its increasing trend channel way back in mid-September and has continued to its largest decline on date. The struggle for the dollar’s play out can be seen from its pairings, especially from its most liquid equivalent. The EUR/USD has advanced for five successive days and is up 13 out of the past 16 trading sessions. This is a signal of the weakness of the dollar.
Euro regains its position against the dollar, pound and Swiss franc
The euro has slowly regained its composure and is doing remarkably well this week. Due to the fact that euro started going higher after the return of liquidity; the euro has started to give steady gains across the board. Most striking is its performance vis-à-vis the dollar (gone up by 1 percent) and also it’s ascend against the British pound and the Swiss franc which reveals its actual performance. The Sterling is just a few paces away from the center of Europe’s financial illness, so the strength of the EUR/GBP is hopeful.
Nevertheless, taking into consideration the capital outflow from the region making attempts to steer clear of the financial predicament; tax changes and credit crunches is the most important source of EUR/CHF weight; its improvement is remarkable. The euro’s steady improvement has been quick and breaks from the present condition of the market. The likelihood of ECB flexibility on Thursday, the Greek aid payout cold make the relief rally for the euro end, as it is devoid of a vigorous driver to keep it going strong.
Yen down as stocks surge in China
The yen slid against the major currencies, hitting a seven-and-half-month low against the euro in Asia and Shanghai stocks continued to surge ahead. This has been triggered by the buying of higher yielding currencies in favor of the yen.
The Shanghai Composite Index went up by 3% at 2034.58 amidst expectations that China’s new-fangled leadership will boost urbanization and construction of public housing facilities, and following data showing a constant improvement in the service sector of the nation, although at a slower rate.
Ahead of the rise in Chinese stocks, many market players were expecting and squaring positions for a rise in the yen. This squaring of positions speeded up the fall of the yen.
The common currency was at ¥107.79 as of 04:50 GMT after hitting a seven-and-a-half month high of ¥107.96. The dollar was up at ¥82.18 from ¥81.90.
Bank of Japan highlighted a depressing image of the nation’s economy, stressing that the Bank is all set to take easing steps if downside risks take a toll on the country’s economy.
Crude oil futures were higher during the morning hours of Wednesday
Crude oil futures were higher during the morning hours of Wednesday in Europe as the US dollar came under broad selling force even as the investors went on watching the continued drama and negotiations going on between the Republicans and the Democrats for finding out a way to avoid the US fiscal cliff. The light sweet crude futures for delivery in January traded at $88.90 a barrel during European morning trade, up 0.45% on the day on the New York Mercantile Exchange.
The weakening of the dollar against some of its major counterparts is the reason for the crude oil gains, though sentiment was boosted somewhat by the signs of progress in managing the sovereign debt crisis in the Euro zone. The price of oil usually strengthens whenever the US dollar weakens.