The Dollar Tumbles Along With The Yen As Better Than Expected GDP Figures Spur Risk Demand

Daily Forex Fundamentals | Written by Finotec Group | Oct 30 09 09:09 GMT |

The greenback and Japanese Yen fell against the euro as a government report announced the U.S. economy grew more than expected in the third quarter, spurring demand for higher yielding assets. U.S. gross domestic product (GDP) grew at a 3.5 percent annual rate in the third quarter, after shrinking in the previous four periods to -0.7%. The Dollar Index which is used to track the greenback against a basket of major currencies including the Euro and the Sterling dropped for the first time in six days, decreasing 0.6 percent to 75.947. Investors remained skeptical that the Federal Reserve will increase borrowing costs in early2010 leading traders to believe that the dollar will continue to weaken over the next six months. 'A cheaper dollar is unquestionably positive for U.S. corporate earnings,' said Bankim Chadha, the New York-based chief U.S. equity strategist at Deutsche Bank AG. The EUR/USD is currently trading at $1.4845 as of 19:20PM, GMT with a bullish trend. The British pound rallied broadly on Thursday against the euro and the dollar after strong U.S. economic data bolstered confidence amongst investors of an improving global economy, spurring demand for higher risk currencies such as the Sterling and Australian dollar. Traders quickly put aside data showing weak growth in UK money supply this morning, although the figures kept speculation intact that the Bank of England may expand its program of Quantitative Easing (QE). Data today also showed UK mortgage approvals rose more than expected in September to an 18-month high, although consumers continued to cut back on unsecured borrowing for a third consecutive month. 'This data further cements the odds in favor of at least a 25 billion pound increase in the QE limit,' analysts at RBC said in a note. The GBP/USD is currently trading at $1.6544 as of 20:19PM, GMT with a bearish trend. Canada's dollar also known as the loonie climbed from a three week low against the greenback as commodities mainly crude oil surged after a report showed U.S GDP came in at 3.5% in contrast to last quarter's -0.7%. Canadian Bank officials reiterated warnings at their Oct. 20th policy meeting that the ascendancy of the nation's currency threatens its economy. Bank Governor Mark Carney amplified the comments in a parliamentary testimony this week. The Canadian dollar gained 0.2 percent this month against its U.S. counterpart. It rose to 1.0207 on Oct. 15th, approaching parity for the first time since July 22, 2008. The USD/CAD is currently trading at 1.0676 as of 21:11PM, GMT with a bearish trend. Finotec Group Inc. http://www.finotec.com/ Disclaimer: FINOTEC Tradings Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein.