Monday, 16 Aug 2010

Positive U.S. Long-Term Purchased Weakens the Dollar

The U.S. dollar fell against most of the major currencies during today's trading session. The dollar dropped about 100 pips against the euro and about 150 pips vs. the British pound.

The dollar fell as positive data eased concerns from a halt down in global economic recovery. The Long-Term Purchases report showed that long-term U.S. financial assets rose in June by $44.4B from $35.3B in May, well above expectations for a $36.3B. The positive data has increased risk appetitive in the market, and as a result turned investors to look for riskier currencies, such as the euro and the pound.

Looking ahead to tomorrow, the publication that looks to have the largest impact on the market is the U.S. Producer Price Index (PPI). The PPI is one of the broadest gauges for economic inflation, and thus tends to have a significant affect on the market. If the end result will continue to show that the U.S. economy is recovering, the dollar might weaken further.