Dollar Index Falls as Risk Appetite Makes an Appearance

The US dollar index is lower as the US session comes to a close. Risk appetite has put in an appearance today, and forex traders are looking for better yields and moving away from safe havens.

US stocks are set to close higher for the third day, and hope is once again forming that European leaders are really serious about containing the sovereign debt crisis in the eurozone. Efforts to recapitalize European banks are being met with enthusiasm, and even Germany seems to be coming around to the idea of a bailout fund.

Additionally, investors are cheered by better-than-expected jobs data in the US. Jobless claims were lower than expected, following yesterday’s ADP announcement of jobs created. Non-farm payrolls are to be announced tomorrow, and many expect to see that situation improved during September. All this optimism is lending strength to the euro, and sending the US dollar lower. Greenback is lower against other currencies as well, as evidenced by the faltering dollar index.

Of course, it’s not all good news. The fact remains that Ben Bernanke offered a sober look at the future of the US economy, and the Fed‘s instigation of Operation Twist can be seen as evidence that more stimulus is in order. For now, though, risk appetite is a reality, and forex traders are turning to currencies other than the dollar.

At 19:31 GMT, EUR/USD is up to 1.3437 from the open at 1.3349. USD/JPY is down to 76.68 from 76.79, and USD/CAD is down to 1.0382 from 1.0403 (a change from the struggles seen by the loonie earlier today).

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