The Greenback lost its value against the other major currencies on account of speculation that the US Federal Reserve shall continue to maintain zero interest rates. The Euro increased by 0.0629 percent against the Greenback to USD $ 1.4561, while the dollar was to 81.8848 Yen. Meanwhile, the Australian dollar was to 87.9924 Yen.
The market expects that the Fed shall continue its Quantitative Easing programs in order to bolster the US economy, and shall therefore continue to maintain zero interest rate. This would reduce the appeal of US assets to investors, which is leading to selling of the dollar, thereby contributing to its depreciation. Standard & Poor revised their outlook on the US economy’s debt level from “stable” to “negative”, and warned US policymakers that they risk losing out their AAA credit rating unless the government agrees on concrete plans to reduce the US debt levels by 2013.
On the other hand, reports showed that Europe’s services and manufacturing sectors recorded unexpected growth levels in April, signifying that the European economy is improving and is on the right track. This helped to explain the gains of 1.1 percent made by the Euro this week.