Risk appetite is back today, and riskier investments, including stocks, are climbing higher.
In the currency world, this means the US dollar is getting slammed. The ICE US Dollar Index, which measures the greenback against a basket of six rivals, is down more than 1%.
The dollar weakness comes “thanks to the update from the Fed yesterday, where the US central bank suggested it could keep quantitative easing in place indefinitely,” said David Madden, market analyst at CMC Markets.
Dollar rivals are gaining across the board, with the British pound taking the lead, up 1.4%, buying $1.17. Sterling dropped to its lowest level against the buck since the 1980s last week.
The Euro is up 1.1% against the US currency, at $1.08.
But it’s not clear whether the dynamic of the stronger buck will be sustainable.
“Virtually every major central bank is engaging in QE with zero rates. As such, all currencies are on a level playing field and we so we have to go back to looking at the fundamentals,” wrote Win Thin, global head of currency strategy at Brown Brothers Harriman, in a note this morning.