2010-03-04: Dollar Falls vs. EUR on Positive ISM Data
The U.S. dollar traded lower Wednesday as investors moved to higher-yielding currencies and riskier assets after U.S. data was better than expected. ISM service data showed the U.S. services sector grew in February at its fastest pace in more than 2 years, reducing the appeal of the greenback as a relatively safe investment.

USD
The U.S. dollar dropped versus the EUR and other major currencies Wednesday as Greece outlined tax changes and budget cuts to help reduce its deficit, easing concerns about a debt-fueled crisis and reducing the relative appeal of the U.S. currency.

The Dollar also turned lower versus the Japanese currency, slipping 0.4% to buy 88.47 yen. The U.S dollar may fall for a 3rd day against the JPY on speculation job losses in the U.S. will encourage the Fed to keep borrowing costs unchanged.

The USD fell for a 2nd day against the EUR as traders increased bets the Federal Reserve will keep its target interest rate near zero to sustain a recovery in the world’s biggest economy. The U.S. currency weakened after Fed Bank of Dallas President Richard Fisher said borrowing costs should remain low until the economy picks up, which won’t happen for some time.

EUR
The EUR was firmer on Thursday, as investors encouraged by Greece’s fresh austerity measures to reduce its deficit cut some of the record short positions in the single currency. Greece announced plans for a further $6.5 billion in pay cuts and tax hikes to reduce its deficit, easing worries about the country’s debt crisis.

The European currency traded near a 2 week high against the U.S dollar on easing concerns the European Union’s biggest budget gap will derail a regional recovery after Greece announced tax increases and deeper spending cuts. The EUR traded at $1.3703 from $1.3697 yesterday when it reached $1.3736, the strongest since Feb. 17

However, gains in the EUR were tempered on speculation the European Central Bank will maintain credit easing measures at a policy meeting today. Economists expect the ECB to keep the benchmark rate at 1% as in previous months.

JPY
The Japanese yen climbed against the U.S dollar amid speculation Japanese companies were buying the currency. The yen strengthened to 88.48 versus the U.S. currency, the highest level since Dec. 14, from 88.85 yesterday.

The Japanese currency rose to its highest in more than 2 months against the greenback on Wednesday as investors cut long positions versus other currencies. Investors fret about a stronger yen because it eats into exporter profits when repatriated.

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