Profit Taking Sends U.S. Dollar Lower in Currency Trading

The greenback is retreating in forex trading on the currency market today as profit taking ensues. The U.S. dollar is seeing a great deal of profit taking after last week's gains. This week, though, it is expected that the greenback will continue lower in forex trading, for reasons beyond Fed member James Bullard's remarks about the U.S. dollar.

MarketWatch reports on the impact of Bullard's statement regarding the continuation of the asset buying program enacted by the Fed as an economic stimulus measure:

"Central bank rhetoric on exit strategies remains pivotal for price action across major asset classes," said Kenneth Broux, market economist at Lloyds TSB. "This was clearly illustrated overnight as Asian markets digested comments by the Fed's Bullard, supportive of additional [mortgage-backed securities] purchases."

The asset purchases have been viewed as a negative for the U.S. dollar, while stimulus measures in general have helped fuel risk appetite to the advantage of equities and commodities.

Other factors that are sending the U.S. dollar lower in currency trading on the FX market include the fact that gold is once again reaching a new high, and that global equity markets are in the midst of a rally. With risk appetite on the rise, it is little surprise that the greenback is lower in forex trading.