The single currency hit a two-week low against the greenback yesterday as a rise in risk aversion strengthened demand for the haven currency.
- The dollar rose for a second day as evidence that economies have yet to shake off the worst effects of the global recession spurred demand for the safety of the U.S. currency.
- Russia’s central bank cut its main interest rate, signaling that things are not as positive as they appeared previously, and spurring demand for the dollar.
- The greenback also found support following a disappointing US consumer confidence survey, which cautioned investors in their risk appetite.
- Comments from ECB President also weighed on the euro, with Trichet saying that he was in favour of the argument for a strong US dollar in the foreign exchange markets.
- The remarks were reflective of a concern regarding the strength of the single currency on the eurozone economic recovery.
- This morning, the single currency has stretched back over 1.46 as risk sentiment returns to the market, diminishing demand for the dollar.