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High yielding currencies gained, traders` appetite for risk improved

February 7, 2014

The high yielding currencies picked up ahead of the U.S. employment data on queue Friday. This comes along with advancing appetite for risk, and more demand for the high yielding majors after improvements seen in the U.S. labor market. Data released Thursday showed the U.S. jobless claims declined for the first time in three weeks, declining 20,000 to 331,000 from a previous revised 351,000 in the period ended February 1. The reading came better than forecasts that referred to 335,000, which added more optimism about the strength of recovery in the labor sector. Higher risk appetite is also supported by expectations to see improvement in employment change, which is going to encourage the Federal Reserve to continue with its plan to withdraw monetary stimulus from financial markets. Furthermore, yen dropped against dollar and other major currencies after a series of gains, as investors are seeking high yielding currencies, dropping the safe haven amid instability in financial markets. EUR/USD inclined to record the highest in one week at 1.3618, before it goes back to 1.3592 levels. USD/JPY picked up as well to 102.16, and now the pair is hovering around 101.95. Nevertheless, the union currency gained against the Japanese yen to the highest this week at 138.81, before it turns back to the 138.58 levels. The Australian dollar continued with its positive performance that started this week, especially after the Reserve Bank raised its economic growth and inflation forecasts today, having Aussie recording 0.8979 against the U.S. dollar, and the pair is currently hovering around 0.8934.

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Source: Financial Markets

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