Foreign Exchange market Summary

The US dollar tumbled on optimism the global economy will recover soon, reducing the greenback as a safe haven. The Dow, Nasdaq and S& P 500 all reached new 2009 highs after existing home sales rose 7.2 percent in July, the fourth straight month indicating that homes are selling fast. Meanwhile, Federal Reserve Chairman Ben Bernanke said there is a good chance the overall economy could grow soon, but warned that unemployment in the United States would remain at high levels. Thus, recovery will come slowly. The markets fear that rising unemployment will dent consumer spending and America needs consumers to spend to help prop up the ailing economy.
The euro rallied after German services and French manufacturing unexpectedly jumped in August, the first time in a year, providing evidence the global recession is easing. Eurozone service sector and manufacturing activity also jumped. Positive data is benefiting the euro despite some worries about the impact of a potential economic slowdown in China.
The British pound stormed higher, benefiting from positive news elsewhere in the world. The sterling took a beating earlier this week after Bank of England minutes revealed some policymakers had wanted to increase quantitative easing as early as this month. The news raised worries that the British economy may take longer to recover.
The Japanese yen is trading lower on global recovery hopes. This optimism contrasts with Japan's economy. Bank of Japan board member Atsushi Mizuno recently said the recovery in the country's export sector could slow during the fall and that a sustained recovery would call for support from governments and central banks.