The Dollar weakens below $1.50 against the Euro as investors seek risk

The greenback weakened beyond $1.50 per euro for the first time in 14 months as optimism the global economic recovery is gathering momentum increased demand for riskier assets at the expense of the greenback. “This has enormous psychological significance,” said Michael Woolfolk, a managing director at Bank of New York Mellon Corp. in New York. “It opens the way for further gains above $1.50, which is overwhelmingly market consensus.” The dollar plunged 18 percent from that level as efforts by global central banks restored liquidity and signs of economic recovery encouraged investors to sell the greenback and buy higher-yielding assets. A close of the euro above $1.50 today “would add to bullish sentiment,” said George Davis, chief technical analyst for fixed-income and currency strategy in Toronto at RBC Capital, part of Canada’s largest lender. The EUR/USD is currently trading at $1.5010 as of 21:19PM, London Time.

The British pound gained against the dollar and the euro on Wednesday after traders read Bank of England policy meeting minutes as making an extension of quantitative easing next month less likely. Sterling rose to a five-week high after Bank of England Governor Mervyn King wrote in a newspaper opinion piece that “it would be wise” to take into account the prospect of higher interest rates. Minutes from the BoE meeting earlier this month showed policymakers voted unanimously to keep its asset-buying programme at 175 billion pounds and to hold interest rates at a record-low 0.5 percent, while judging that recent developments did not warrant any immediate change. At the same time, they showed "differences of view" on the outlook for UK inflation, and said new forecasts for growth and prices next month would allow for further discussion on prices. The GBP/USD is currently trading at $1.6600 as of 21:23PM, London Time.

Canada’s dollar climbed on gains in crude oil, the nation’s biggest export, as investors sought higher yielding assets that historically benefit when global demand rebounds. The Canadian currency, nicknamed the loonie, pared its advance as U.S. stocks tumbled in the final hour of trading after analyst Dick Bove downgraded Wells Fargo & Co., the largest U.S. home lender this year. The Standard & Poor’s 500 Index dropped 0.9 percent after rising as much as 0.9 percent. “Yesterday we had a very large kneejerk reaction to what the Bank of Canada said,” said Andrew Busch, a global currency strategist in Chicago at BMO Capital Markets, a unit of Canada’s fourth-largest bank. “A day after that, things are a little bit calmer and they realized that nothing really changed.” The USD/CAD is currently trading at 1.0435 as of 21:33PM, London Time.

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