Monday, 4 Jan 2010

Dollar Drops on Increased Risk Demand

The Dollar slid today against most of the major currencies. The Dollar dropped over 150 pips against the Euro today, as the EUR/USD reached the 1.4450 level. The Dollar also dropped about 80 pips against the Yen.

The Dollar fell as stocks rallied on further positive economic data which increased optimism for global economic recovery. This has increased demand for riskier assets, and supported the Euro and the Yen, at the expense of the Dollar.

Looking ahead to tomorrow, the most impacting news publication on the economic calendar seems to be the U.S. Pending Home Sales. This report measures the change in number of homes under contract to be sold but still awaiting the closing transaction during November. Analysts forecast that the number of homes to be sold has decreased by 2.3% during November. If the end result will be similar, it has the potential to further weaken the Dollar.