Euro lost ground vs the dollar following an easing in risk appetite

The greenback continued to rally against the single currency yesterday, buoyed by a rise in risk aversion, to close the day at 1.4660.

  • The dollar was under pressure yesterday after Wednesday night’s Federal Reserve meeting left investors with the message that US interest rates will remain very low for a long time.
  • The euro also made gains against the dollar as the German Ifo Business climate survey rose to its highest level in a year in September, though it did undershoot forecasts of a stronger advance.
  • However, the US dollar turned higher in the afternoon, after a report showed that sales of existing homes in America unexpectedly dropped in August, the first decline in five months.
  • The euro also erased gains after major central banks, including the Fed, announced they were scaling back some emergency lending facilities.
  • These gains were added to as US stocks turned negative in the afternoon, which further eased risk appetite in the market.
  • This morning, the euro has recouped some of its losses after a statement from the G20 encouraged speculators to sell the low-yielding greenback.