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Dollar climbs as higher stocks boost risk appetite Simon Falush The dollar climbed against a basket of major currencies on Wednesday as rising equity markets gave investors the excuse to take profits after two days of selling the U.S. currency. Stock markets were cheered by prospects of further consolidation in the mining sector, with the FTSEurofirst index gaining 0.7 percent. This in turn weighed on the yen, which has shown a strong negative correlation with movements in equities in past weeks. "There was a distinct sense of slight optimism which has fed through to the yen being under pressure," said Simon Derrick, head of currency research at Bank of New York Mellon. The dollar was also supported by a comments from the UAE central bank governor Sultan Nasser al-Suweidi who said it would not change its dollar peg policy "for the foreseeable future."
Suweidi had previously bolstered market expectations of a Gulf Arab currency policy shift when he said last month that he was under pressure to scrap a peg to the tumbling dollar. However Derrick said that this dollar-positive sentiment is fragile and moves have been exaggerated by a lack of liquidity. "Investors have remained on the sidelines ahead of rate decisions tomorrow (from the European Central Bank and Bank of England) and (U.S> non-farm payrolls (data) on Friday."
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