US Dollar Drops against Major Currencies on Continued Market Worries

The U.S. Dollar lost against the Euro in early trading in London, as a result of skepticism among traders as to whether or not the U.S. Dollar’s Wednesday gains can be sustained amid continued concerns for the financial sector.
 
Wednesday’s major rally in the equity markets, which was driven by falling oil prices and strong corporate earnings, helped the U.S. currency post some significant gains.  Unfortunately, investors who are still feeling uncertain about the financial future of Fannie Mae and Freddie Mac, the two largest mortgage lenders in the United States, provided no further support for the U.S. dollar.

At 08:02 GMT, the U.S. Dollar was trading at 105.40 Yen, compared to 105.10 Yen earlier, while the Euro was trading at $1.5856, up from an earlier price of $1.5827.  The Pound Sterling traded at $1.9997, down from yesterday’s close at $2.003.  
Additionally, a recent Financial Times report showed that several large global sovereign wealth funds have begun diversifying from their U.S. Dollar-denominated assets, which has weighed heavily on the U.S. currency.

Until the weekly jobless claims report and the housing start figures from the U.S. are released later today, movements in the equity and commodity markets will likely tend to be the driving factors in the currency prices this morning.