The US dollar slid on Tuesday against other major currencies, hitting a three-month low against the euro, as surprisingly strong US manufacturing data encouraged risk-taking. In addition, the dollar, which saw a safe-haven bids late last week when protests in Egypt intensified, fell broadly as risk appetite returned, hitting a four-week low of 81.33 against the yen and falling 0.9% against the CHF to 0.9355.
The dollar has fallen every day this week against the EUR, Sterling Pound, and yen. Analysts attributed the fall in the dollar, which has been treated as a lower risk, safe-haven investment, to growing optimism that the worst of the financial crisis has passed, causing investors to unwind long dollar positions when fear was widespread, credit was frozen and stock markets were in a free fall.
Another leading indicator released yesterday was U.S Manufacturing PMI. This number handedly beat last month's result but failed to provide strength to the dollar as investors may be waiting for key data due to be released today to implement their trading strategies.
Looking ahead today, the news event that may have a very large impact on the dollar and its main currency pairs in today's trading is the ADP Non-Farm- Employment Change around 13:15 GMT. This report is very important as it will likely impact dollar volatility. Traders should pay close attention to the market as there is an opportunity to capitalize on the fluctuations which are likely to follow this release.