Aussie and Kiwi Dollars Big Winners

The US dollar remains on the defensive as investors get out those forex converters and seek higher yielding currencies. Two of the biggest winners have been the Australian and New Zealand dollars and the Aussie dollar is now at a one year high. Rising stocks in the US and Asia has lifted risk sentiment and investors are seeking riskier assets.

DXY May Fall to 2008 Levels

Rising risk sentiment has caused the DXY to decline to 76.226 which is near the one year low of 76.151 on Wednesday. Many currency experts believe the DXY will fall to 2008 levels of around 70.70. Hideaki Inoue of Mitsubishi UFJ Trust Bank stated, “Firm stocks suggest the dollar is probably set to slide for another week.”

Euro Rally Due For Correction

The euro has gained 2.5% this month on improved investor risk appetite and the perception that US rates are likely to remain at record lows for the near future. The euro rose 0.1% to $1.4729, near the one year high of $1.4738 on Wednesday. Some experts doubt that the Euro’s rally will be sustained. Matthew Strauss of RBC Capital stated, “With eight of the nine last sessions ending in euro rallies, the upward trend is extremely stretched. In fact, euro valuations against the U.S. dollar are the most extreme since May this year. The trend is your friend but beware the technical correction.”

Aussie at One Year High

The Aussie dollar rose to a one year high of $0.8757 and in early afternoon Asian trading rose 0.2% to $0.8743. The Kiwi dollar also rose almost 1.4% on Wednesday and is holding at 0.7134. The euro to yen rate rose 0.3% to 134.20. The US dollar rose 0.2% against the Yen to 91.10. The US dollar slid against the Yen after Japan’s Finance Minister Hirohisa Fujii said a strong yen would benefit the Japanese economy.

New Data Due

Data that will affect currency exchange rates include retail sales for August due in the UK, US jobless claims, US housing starts and the Philadelphia Fed business activity index. All are scheduled to be released Thursday.