By: Barbara Zigah
As reported at 10:23 am in Sydney, the U.S. Dollar held onto small gains in Friday’s Asian trading following another round of investor profit-taking. Perplexing many market players, the U.S. Dollar’s rise had no sound explanation, characteristic of the greenback’s trend over the last 8-months. Some attribute the bounce to soft equities while others suggest Wall Street’s drop in share prices is to blame. The U.S. Dollar Index, a measure of the U.S. currency’s value versus other major currencies, rose to 75.655 .DXY, off of the 15-month low established earlier in the week.
In other currency trading, the single currency Euro slipped to $1.4845 after hitting a high on Thursday of $1.5048. Some analysts suggest that the Euro’s decline is in reaction to speculation that China may soon allow some appreciation of the Yuan. Theoretically, an appreciating Yuan would prop up other regional currencies and alleviate pressure on the Euro, which would then appreciate against the greenback. One risk to the U.S. Dollar under this scenario could be that central banks in Asia might not be compelled to invest their excess U.S. Dollar into U.S. Treasuries, thus increasing worries about the United States’ ability to fund the huge budget deficit.
U.S. Dollar Holds onto Gains on Profit-taking
Barbara Zigah
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About Barbara Zigah
After working on Wall Street, Barb began her second career as a freelance writer at Daily Forex, where the CEO recognized fresh, untapped potential and was willing to give her a try. She’s never looked back. Since then, she’s worked steadily as a freelance writer and editor in the financial services and Forex-related industry.