Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Forex - Dollar gains on bottom fishing after Fed-fueled selloff

Published 08/24/2012, 03:08 PM
Updated 08/24/2012, 03:10 PM

Investing.com - The dollar rose against most major global currencies on Friday as investors snapped up nicely priced positions in wake of a selloff earlier this week stemming from dovish comments out of the Federal Reserve.

Concerns Europe will be slower than expected to tackle its debt crisis fueled dollar demand as well.

In U.S. trading on Friday, EUR/USD was down 0.39% at 1.2516.

Earlier this week, the Federal Reserve said it would consider stimulating the U.S. economy if needed, the U.S. central bank revealed in the minutes of its recent two-day monetary policy meeting that began on July 31.

"Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery," the minutes read.

The comments sparked a dollar selloff on the notion that the Federal Reserve will announce plans to roll out a new round of quantitative easing soon.

Quantitative easing, under which the Fed buys bonds such as Treasury holdings and mortgage-backed securities from banks, weakens the dollar with the aim of spurring recovery.

However, data since then has surprised on the upside, including stronger-than-expected retail sales and consumer sentiment figures.

Friday saw bullish data as well, which sparked demand for the greenback.

The Census Bureau reported earlier that U.S. durable goods orders rose to 4.2% in July from 1.6% in June, whose figure was revised up from 1.3%.

Analysts had expected durable goods orders to rise 2.4% last month.

The dollar rose on the news despite comments from Federal Reserve Chairman Ben Bernanke, who told a lawmaker in a letter that the Fed had the "scope for further action."

The dollar also rose out of concerns in Europe, where market talk that the European Central Bank will buy Spanish and Italian government debt to ease the debt crisis grew.

However, a German court is still deciding if participating in European bailout activities violates the country's law, which sent investors returning to the dollar to await more definitive steering currents to guide them.

The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.33% at 1.5808.

The U.K. gross domestic product contracted 0.5% in the second quarter, less than market forecasts for a 0.6% contraction and an improvement from an original estimate of a 0.8% decline in output.

The dollar was up against the yen, with USD/JPY trading up 0.27% at 78.70, and up against the Swiss franc, with USD/CHF trading up 0.37% at 0.9593.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.27% at 0.9912, AUD/USD down 0.31% at 1.0409 and NZD/USD down 0.19% at 0.8112.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.26% at 81.60.






Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.