Dollar Falls as Risk Taking Returns to the Marketplace

The US dollar took losses throughout the European session yesterday, as speculations that the ECB will soon take definitive steps to combat the euro-zone debt crisis led to risk taking in the marketplace. Against the Swiss franc, the dollar fell close to 100 pips to reach as low as 0.9627 during afternoon trading. The GBP/USD was able to reach a two-month high at 1.5777 during mid-day trading, despite a worse than expected UK Public Sector Net Borrowing Figure. A very slight downward correction later in the day brought the pair down to the 1.5770 level. Today, the dollar will have several opportunities to recoup some of its recent losses, as a batch of potentially significant US news is set to be released. The Existing Home Sales figure, scheduled for 14:00 GMT, is expected to show improvements in the US real-estate sector. If today's news comes in above the expected 4.52M, the dollar could see gains against the yen during mid-day trading. At 18:00, the latest FOMC Meeting Minutes will be released. While some analysts are forecasting the meeting minutes to hint at a new round of quantitative easing, others are more skeptical given recent positive US news. If the Fed refrains from mentioning any new plans to stimulate the US economy, the dollar could see gains during evening trading.

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