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US Dollar Drops as Risk Appetite Returns to Markets

June 19, 2012 at 16:17 by Miranda Marquit

A sheet of new hundred-dollar billsUS dollar is heading lower today, losing ground as concerns about the eurozone fade a bit. Also weighing on the greenback is the possibility that the Federal Reserve will announce more stimulus, weakening the US dollar further in the hopes of providing a boost for the economy.

Dollar index is falling today, dropping as the greenback heads lower against its major counterparts. Risk appetite is back on as better news out of Europe helps the ailing euro. European leaders are ready to revisit the terms associated with the Greek bailout, and that is providing hope that Greece will actually be able to manage the austerity measures and its debt.

In the United States, housing data surprised to the upside, and that is boost appetite for risk as investors are cheered. Of course, there is speculation that this latest positive economic data won’t be enough to let members of the Federal Reserve sit easy. Many expect Ben Bernanke to announce more stimulus at the conclusion of the current two-day FOMC meeting. That would weigh on the US dollar, as stimulus is often a deliberate weakening of a currency.

At 14:14 GMT, the dollar index is down to 81.368 from the open at 81.851. EUR/USD is higher at 1.2690, up from the open at 1.2576. GBP/USD is up to 1.5724 up from the open at 1.5667. USD/JPY is down to 78.9345 from the open at 79.1105.

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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