Thursday, 29 Oct 2009

Dollar Falls on Economic Optimism

The dollar fell against the EUR on Thursday after data showed the U.S. economy returned to growth in the third quarter, reducing the greenback's safe-haven allure and sending investors elsewhere for better returns. The solid gross domestic product reading renewed optimism about recovery in the global economy, prompting traders to buy higher-yielding currencies such as the Australian dollar.

The Dollar is currently trading lower against the EUR by nearly 100 pips at 1.4840. It is also trading lower against GBP and CHF, as traders feel that the U.S. currency is an unstable bet for today.

As the U.S. market comes to a close, the USD may continue to weaken further, as forex traders feel that the USD is a risky bet for today. As a result, a fear about the Dollar's instability has led Oil to rise over $2. If today's trend continues, then the USD may be in for a bumpy week as a sell-off of the Dollar may hit full-force.