Euro at One Month High vs. Dollar

The euro rose to a one month high against the US dollar on Wednesday in advance of the release of the Fed’s ‘Beige Book.’ Commodity linked currencies such as the Aussie dollar and Canadian dollar gained broadly as investors concluded that China’s recent monetary tightening policies would not affect Chinese economic growth. Omer Esiner of Travelex Global Business Payments in Washington said, “The reaction yesterday to China’s measures was a bit overstated, with the euro and most commodity currencies selling off. Today we are seeing a retracement of that move and the realization that the impact of the China’s bank moves won’t be so detrimental to the global growth scenario.” The euro gained 0.5% and last traded at $1.4568.

Fed Beige Book Due

Traders and investors are waiting for the release of the Fed’s beige book which is it’s its survey of economic conditions. In addition top executives of Wall Street’s largest firms are scheduled to testify before congress later in the day. Sacha Tihanyi of Scotia Capital stated, “Any significant improvement (in the Beige Book reading) would be mildly bullish for the dollar in the current trading environment.” The pound gained for the fourth straight day against the dollar. The pound was helped by statements by Bank of England policy maker Andrew Sentence who said that interest rates may have to increase this year. Disappointing US job figures have pressured the dollar in recent trading sessions. Many analysts see the recent figures pointing to lackluster recovery in the US. Andrew Wilkinson of Interactive Brokers Group stated, “The lackluster momentum for the U.S. recovery has resumed and that seems to be undermining the dollar right now.”

Yen Drops

The Japanese yen dropped as stocks rose and many now see the yen as the currency of choice for carry trades. David Deddouche of Societe Generale SA stated, “The yen is clearly now the funding choice for the carry trades. As long as we stay in the sweet spot for equities, the yen has weakening bias.”

Quick Forex Tip: Opening a currency trading account is a relatively easy affair but participating in currency exchange markets requires a lot of preparation. Currency trading accounts allow the average investor to participate in the dynamic and lucrative forex market. One of the main reasons so many investors are attracted to currency markets is the leverage available to investors. Currency trading accounts offer investors much higher leverage than is available in stock and commodity markets, so they are a great tool to use.