The dollar tumbled heavily today on a strong risk appetite which sent investors left and right into risky and higher yielding assets and slammed the dollar strongly south!
The dollar index tracking greenback's performance slumped to the low of 74.29 and now hovering around 74.38 down nearly 0.86% well below opening highs of 75.08. The strong risk appetite was triggered midday on Tuesday with the flow of good earnings which shifted the market focus to good data that flowed from Europe and the US and today was followed by more positive earnings with the lack of much data.
Gains are seen across the board and surging with new records recorded across. Aussie rallied to a new high versus the dollar and broke through $1.06 to set the high of 1.0685 and currently hovering at 1.0671. Aussie was surely supported by rate bets, risk appetite, weak dollar, and surely record surging gold!
Even with the risk appetite, the golden metal continued the rally with the dollar weakening further. Gold finally broke through the psychological $1,500 and set the new record at $1505.44 per ounce, and now trading above the breached strong resistance at $1503.35 above early lows of 1492.85 per ounce.
The euro rallied strongly higher on the returning risk appetite to reverse the early drop this week. With investors getting ready for a long Easter weekend in Europe and the ongoing bets for ECB tightening the euro did not seem so debt burdened for the market anymore.
Following a successful Treasury bills auction from Greece yesterday, Spain today found good demand on its bonds and sold 3.4 billion euros for 10 and 13 year bonds according to the Bank of Spain compared to the Treasury set ceiling of 3.5 billion.
The EURUSD rallied to the high of 1.4545 from the low of 1.4325 and eyeing the 1.4600 areas still. The pair is currently hovering around 1.4518 with high volatility expected with negative momentum pressures.
Sterling returned to the upside despite the weakness seen after the BoE minutes. The GBP/USD is currently hovering around 1.6364 recording the high of 1.6387 and the low of 1.6306. The split among policy makers is still evident while the majority in April meeting cited downside pressures on the economy which further undermined the odds for hikes. Nevertheless, the weak dollar and the risk appetite sustained sterling's gains versus the dollar.
The volatility is to remain and the focus in on the US housing data at 14:00 GMT today where if they matched the expected strong rise following yesterday's housing start the risk appetite will be dominant for the rest of the day.