USD sets New Low

Written by Research | 14 October 2009

Bias USD moves lower

The US Dollar Index continues to get hammered lower to new lows at the price levels of 75.70 bp. and any hopes of any form of a rally has grown deem. With market participants growing increasingly convinced that the once mighty USD has now officially lost its status as being the World's Reserve currency per se. There have been articles out from

many major newspapers each day discussing the depreciating US dollar value compared to some emerging markets foreign currency and this has not help to bolster any confidence for the consumers specially in the United States.

Moreover, there has been little to no effort on behalf of US officials to defend the US dollar currency or even any Central bank intervention by the Federal Reserve Bank. This in conjunction with a market holding a healthy risk appetite and looking for more attractive yield, continues to weigh on the prospects for the USD. Overnight data from China reinforces, after the economy produces some robust trade figures, which helped to boost the higher yielding currencies to fresh 2009 highs. The US Dollar Index has also managed to head south of the border to a fresh 14-month low.

Australian consumer sentiment impressed to the upside, with Aussie rallying to highs by 0.9150 despite of the Business confidence and business conditions in Australia both declined in September, according to survey results from National Australia Bank.NAB reported Tuesday that its business confidence index declined 4.0 points to plus-14 in August while business conditions declined 1.0 point to plus-3.0.

The AUD USD, on the other hand, posted a strong gain on last Monday.  Demand for higher yields helped drive up the Aussie although gains were probably limited by today’s low volume.  Traders are buying the Aussie in anticipation of another interest rate hike by the Reserve Bank of Australia at its next meeting on November 3.

Meanwhile, Asian markets have drifted higher in most cases, after a flat session in Wall Street and amid expectations of upbeat quarterly earnings figures. Euro and Pound have continued appreciating. Tokyo Nikkei Index rose 0.6%, while the HK Hang Seng Index advanced 0.8% and Souh Korean Kospi Index remained practically flat.