American Dollar retreats as risk-appetite returns

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On Thursday, the American Dollar had beaten a hasty retreat against most major and emerging market currencies, as the US Dollar Index (DXY) measured against a basket of six major currencies fell as much as 0.5 per cent, while a rekindling of risk-appetite following a US Fed’s signal that it would begin easing its monthly $120 billion bond repurchase program, had pared almost all of the gains that the American currency had notched a session earlier.

Aside from the US Fed’s signal of a tapering of bond repurchase program in a near-term, appetites for riskier assets spurred up further after Beijing had made an influx of fresh capital into the country’s financial system shortly before an $83.5 million in bond payment scheduled to be released by the Asia’s largest junk-bond issuer, Evergrande, the beleaguered Chinese real-estate giant which has more than a $300 billion worth of properties outstanding, mostly to retail buyers.

In factuality, a plausible ripple effect stemming from a likely collapse of Evergrande, the world’s 122nd-largest group, had kept investors on their toes over recent sessions. Besides, commodity-linked loonies like of Canadian Dollar alongside Australian Dollar, reported large gains as crude oil and natgas prices had soared amid a derisive supply woe, while the US Dollar found little support in the day’s Government data unveiling US initial jobless claims rose unexpectedly above 350,000 last month.

US Dollar falls across the board as risk-appetite craws back

Citing statistics, the US Dollar Index fell 0.5 per cent to 93.07 on late-afternoon US trading hours, paring a 0.3 per cent gain shelved yesterday, however, the US Dollar Index still remained at a spitting distance to a 10-month high reached on late-August.

Commodity-linked currencies such as Australian Dollar and New Zealand Dollar, in tandem, gained 0.9 per cent and 1.2 per cent respectively. The bloc’s single-currency Euro rose 0.40 per cent to $1.1738 against its American peer, while British pound jumped as much as 0.74 per cent to $1.3720, however, the US Dollar extended gains against safe-haven Japanese Yen, rising 0.47 per cent to 110.30 yen per Dollar.

Meanwhile, addressing to a rise in commodity-linked currencies, a chief currency strategist at Scotiabank, Shaun Osborne said in a client note, “Commodity currencies are broadly higher while havens are weaker, leaving the USD trading generally lower after a firm close following the FOMC (Federal Open Market Committee)”.