Currency news - Risk appetite dominates

Risk appetite dominates - 16-01-09

During Thursday, there was further speculation that the Bank of America and Citigroup would require additional financial support to survive. Although these stresses provided some defensive dollar support, fears over the US financial sector will be a longer-term negative dollar factor. From highs near 1.3025, the dollar weakened back to 1.3140.

In Asian trading on Friday, risk appetite improved further following news that the Bank of America would receive an additional US$20bn in equity from the US Treasury to help offset losses from Merrill Lynch. Regional equity markets rallied which curbed yen demand. The Euro strengthened back to 1.3250 against the dollar and probed levels above 120 against the yen as defensive support for the yen and dollar eased.

Both bank of America and Citigroup reported worse than expected results for the fourth quarter on Friday which dampened the mood of improved confidence to some extent.

Tim Clayton
Investica Ltd
E-mail: tim.clayton@investica.co.uk
+44 (0) 1452 781001

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