Dollar Rise on U.S. Stocks Decline

After a very sharp fall versus the euro and high-yielding currencies, the dollar gained today as equities markets, specially in the U.S. ended a rally that started in the beginning of the week with renewed optimism regarding the Dubai debt.

The U.S. dollar had been having a negative performance this week as risk appetite grew intensively after China posted the best monthly manufacturing figures in 5 years, creating an exodus of capital from dollar-price assets towards high-yielding trading opportunities in emergent markets and commodity linked currencies. Today, after two days of sharp decline, the greenback had a breather as stocks finally stopped to grow worldwide and specially in the U.S., and some traders considered the rise too bullish and not backed fully by fundamental factors. The yen dropped versus the U.S. currency as Japanese officials affirmed through statements that the current levels for the Asian nation’s currency may be a subject to intervention, affecting psychologically the yen’s performance today.

According to analysts, today’s movement is a correction on stocks favoring the dollar, as expected after two days of strong risk appetite in the U.S. markets and globally. The U.S. currency remains under pressure, and as the Fed has not signaled any eventual intervention, it’s likely that the greenback will fall further.

EUR/USD traded 1.5037 as of 20:14 GMT from a previous rate of 1.5112 in the intraday. USD/JPY traded at 87.39 from 86.67 yesterday.

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