The greenback fell across the board on Friday as growing optimism that the global recession is easing dented dollar's safe-haven appeal. Investors are more risk-aggressive and more willing to buy in higher-yielding assets. In late New York trading, the ICE future dollar index, which measures the dollar's strength against a basket of six other major currencies, dropped 0.33 percent to trade at around 80.24, while the U.S. dollar tumbled to as low as 96.00 versus the Japanese yen and 1.0765 against the Swiss franc.
Euro rose versus the U.S. currency as a batch of recent upbeat data boosted hopes that global economy is on the path to recovery. In addition, the International Monetary Fund (IMF) First Deputy Managing Director John Lipsky said that IMF is likely to revise its 2010 growth forecast for the world economy up with signs the rate of decline in globally output has moderated. However, he warned that the world-wide financial conditions are far from normal and the global economy is still in recession. As the risk appetite of investors improved, euro jumped to an intra-day high of 1.4013 versus the greenback in New York afternoon before retreating on long liquidation. Furthermore, European Union leaders agreed to create a European system of financial supervisors with limited powers to avert a repeat of banking crisis that has destroyed the world economy.
The British pound rose against the dollar to as high as 1.6562 in New York afternoon session after Bank of England Governor Mervyn King said the policy makers have evidence proved that the economy’s contraction is moderating. King also added that U.K. will definitely recover from the worst recession since 1979 and go back to an ordinary business cycle. FTSE 100 index rose 1.52% bolstered the demand for the British pound. In late New York afternoon, the pound retreated from the session high partly due to profit taking. Cross buying versus euro and yen also lifted sterling with eur/gbp dropping from 0.8529 to 0.8447 while gbp/jpy surged from 157.43 to as high as 159.62.