Japan Growth Force Greenback Down

The U.S. dollar started this week losing versus its Canadian counterpart and the euro as the wealthiest economy in Asia posted an unexpected quarterly growth, signaling traders that economic conditions in Asia are improving driving capital flows towards high-yielding options.

The U.S. currency had a poor performance this Monday after the Japanese economy posted a preliminary gross domestic product growth of 1.2 percent for this year’s third quarter, a much higher level than the 0.7 percent forecast, creating a risk appetite scenario in Asia that favored higher-yielding currencies like the Aussie and kiwi dollar, and set the attractiveness for the relative profile of the U.S. dollar down, as Japan was being one of the slowest rebounding economies from the global slump, fact which changed today providing support for Japanese stocks to rally strongly. The yen also gained versus the dollar as investors are repatriating assets to the Asian nation.

The dollar started another week fliriting with the $1.50 level versus the euro, and its likely that this level will once again be surpassed as risk appetite started strong once again this Monday, according to analysts. The global economy still has room for sharp rebounds and it affects traders sentiment in a way that they will look for yield, and that’s a dollar-negative factor which is likely to be present for the next months.

EUR/USD traded at 1.4974 as of 15:21 GMT from 1.4946 when markets opened yesterday. USD/JPY traded at 89.40 from 89.60.

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