US Dollar Pulls Back on Better News Out of Europe

  June 29th, 2012 at 16:01, Miranda Marquit

A heap of hundred dollars US billsToday, it’s all about the better news out of Europe. US dollar is pulling back against high beta currencies as the news that the EU summit might have accomplished something substantial spurs risk appetite.

Measures to bring down Spanish and Italian bond yields have been agreed upon, including the ability to access European bailout funds without the need to conform to austerity measures. Additionally, a European banking union is closer as European Council members announce that an organization to oversee it will be in place by the end of the year.

This is progress that many hadn’t expected to see, and, as a result, the markets are responding enthusiastically. US dollar is down against the euro and the pound, and other high beta currencies, as Forex traders abandon their requirement for safe haven and instead focus on yield. US dollar is higher against the Japanese yen, but little else because of this shift.

Riskier assets are focused on the European news, and largely ignoring the worse than expected consumer confidence numbers in the United States. There are still some problems to overcome, though, and things could change quickly.

At 15:53 GMT EUR/USD is up to 1.2670 from the open at 1.2445. GBP/USD is higher at 1.5683, up from the open at 1.5519. USD/JPY is up to 79.8090 from the open at 79.4545.

If you have any questions, comments or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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