The Euro and several high-yielding currencies, including the Pound Sterling, gained against the U.S. Dollar today, while the Japanese Yen retreated across the board as rising equities from Asia and Europe helped to diminish extreme risk aversion.
Although some investors have waded back into the waters of riskier assets, the expected gains were negatively affected by concerns about the likelihood of a prolonged global recession, resulting in the overall support the U.S. Dollar and the Japanese Yen, which are low-yielding.
On November 3, 2008 at 09:10 GMT, the Euro rose by 0.9% against the U.S. Dollar to $1.2844 and was up by 1.7% versus the Japanese Yen to 127.59 Yen. The Pound Sterling rose by 1% against the U.S. Dollar to $1.6288; at the same time, the U.S. Dollar rose by 0.7% against the Japanese Yen to 99.20 Yen.
According to forex traders, activity had been reduced before this week’s major events, including tomorrow’s U.S. presidential election. Generally, it is perceived that a win by the Democratic contender, U.S. Senator Barack Obama, will be more favorable for financial markets.
Most major central banks, including the Bank of England, European Central Bank and the Central Bank of Australia are expected to cut interest rates in order to protect their stressed economies from the looming global recession.