Global Equity Rout Hits Dollar


The two day rout in global equities is taking its toll on the US Dollar Index which was trading close to a 2-week low during Asian trade on Friday. Used as a gauge by FX players to assess the greenback's relative strength to its major peers, the Index moved off of Tuesday's 1-month peak at 96.16 .DXY to trade earlier at 95.07 .DXY. Disappointing personal inflation data is also weighing on the Dollar with market players reassessing the Fed's possible interest rate outlook.

As reported at 11:08 am (JST) in Tokyo, the EUR/USD was trading higher at $1.16, up 0.05% and moving away from the session peak of $1.16033. The GBP/USD was higher, as well, with the pair trading at $1.3201, up 0.01%.

ECB May Begin to Normalize Policy

Analysts say that the Euro was the chief beneficiary of general dollar weakness, especially given the upbeat tone of the European Central Bank's latest policy meeting minutes. Despite slowing growth, the ECB seems to be on the verge of normalizing its quantitative easing scheme and may soon begin a gradual tightening policy. Analysts say that Mario Draghi, the head of the ECB, will certainly be wary of the threat of rising inflation, a result of not just a weak Euro but the recent increase in oil prices.

Barbara Zigah is a freelance journalist living in Ghana, who specializes in Forex-related content; her online work has appeared in the IB Times, NASDAQ, Benzinga, and Seeking Alpha.