GO
Loading...

Dollar falls as risk appetite improves

Alice Ross
Wednesday, 31 Oct 2012 | 12:01 AM ET

The US dollar fell for the second day against other major currencies amid improving risk appetite in the forex market.

Trading remained light, however, even as US markets reopened on Wednesday in the aftermath of hurricane Sandy, due to trading desks at many banks and brokers still being closed due to power outages.

The euro, pound, Australian dollar and Swiss franc all posted gains against the US currency, helped by better-than-expected third-quarter corporate earnings in Asia and Europe.

The pound was 0.3 per cent higher at $1.6123 against the dollar, shrugging off a survey showing that UK consumer confidence was weaker than expected in October, and rising instead in line with global risk appetite.

The euro touched above $1.30, rising 0.3 per cent to $1.3007 ahead of inflation data for the eurozone that was expected to show a slowing in the consumer price index to 2.5 per cent in October.

The single currency was also helped by an improving retail sector in Germany, with retail sales rising more than expected in September in the eurozone's largest economy.

The Australian dollar rose 0.3 per cent to $1.0396, helped by signs that the housing sector was holding up better than expected, with building approvals showing a strong rise in September. However, investors were still expecting the Reserve Bank of Australia to cut interest rates again when it meets next week.

Risk appetite was expected to receive a further boost with the release of Chicago PMI figures, a closely watched indicator of the health of the US economy that was expected to show the business sector was expanding once more.

The Norwegian krone posted a sharp gain after Norway's central bank said it did not plan to sell the currency to buy other assets for its oil fund. Purchases of overseas assets by Norges Bank for the country's giant oil fund are one of the most closely watched indicators for the Norwegian krone.

The US dollar fell 0.8 per cent to NKr5.6828, with traders also expecting Norges Bank to hold interest rates at 1.5 per cent later in the day.