Date: Wednesday 07 Jul 2010
The dollar hit its lowest level in almost two months against the euro as confidence returned to the stock markets, but as the equity rally in New York petered out in the afternoon session so the US currency staged a comeback.The dollar index, which measures the greenback’s value against a basket of six currencies, fell to 84.113 from 84.410 on Friday. US markets were closed on Monday for the Independence Day holiday.
The euro enjoyed a good day, returning close to levels not seen since early May. Against the dollar the common currency rose as high as $1.2622 at one point before ebbing to $1.2618, up from $1.2525 the day before.
Sterling also enjoyed support in New York trading, advancing to $1.5135 from $1.5124 on Monday.
Traders said the strong showing of equity markets this week showed a willingness on the part of investors to embrace risk, and this weighed against the dollar’s appeal as a haven for cautious investors.
Earlier in the day in London trading sterling advanced against the greenback but fell back against the euro.
The pound was buying $1.5211 in the afternoon session, up from around $1.52 at the close of trading the previous day, but the UK currency fell to a two week low against the euro, which rose above the 83p level.
Meanwhile, on the other side of the world, the Aussie dollar put in a good shift against its US counterpart despite the Reserve Bank of Australia keeping its interest rates unchanged, as most observers expected.
The central bank did, however, drop heavy hints about further rate rises coming down the pike to follow on from hikes announced earlier this year. That prompted a rush to buy Aussie dollars and pushed the currency from down under up to $0.8493, up some 1.5% on the day. 
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