US Dollar Retreats Amid Shifting Market Sentiment and Economic

The US dollar is on the back foot as the European trading session gets underway, cancelling some of Tuesday’s gains. Yesterday’s drop in risk appetite was felt across the board in financial markets and ended up benefiting the safe-haven dollar. However, today the tune has changed and investors seem to be more optimistic, with the positive sentiment reflected in dollar losses and gains on the stock market. But the weakness of the greenback may not last for long; Chinese inflation data showed that consumer prices have barely moved in July, confirming that the world’s second-largest economy is stalling and may be moving into deflation. Against this background, any greenback losses will be limited as worries over the prospects of the global economy could soon reignite dollar demand.

Ricardo Evangelista – Senior Analyst, ActivTrades