Dollar May Benefit From End of Yuan’s Peg

The U.S. dollar strengthened today on the speculation that there will be less demand for the non-Asian currencies after China relax its two-year peg.

This move should weaken the currencies, which benefit from the reserves diversification, especially the euro. The People’s Bank of China said that there wouldn’t be large-scale moves, the currency will be gradually allowed more flexibility.

EUR/USD traded near 1.2396 as of 11:52 GMT today after it opened at 1.2427. GBP/USD returned to about its opening level of 1.4857 after dropping to 1.4806.

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