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European and Asian Indexes Gain as US Dollar Drops

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US Dollar Index awaits further cues

The US Dollar Index (UUP), which measures the strength of the US dollar against a basket of major currencies, was trading on a lower note on June 15, 2016. The poor performance of the US Dollar Index was not surprising as the US Federal Reserve maintained a dovish stance during the FOMC (Federal Open Market Committee) meeting and kept rates unchanged. The markets were not pricing in a rate hike prior to the Fed’s policy release, with the US Dollar Index hovering around the 94.6 mark.

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Asian currencies continue to trade weaker with the exception of the yen

Major Asian (AAXJ) currencies were trading on a stronger note against the US dollar on June 15 due to losses in the US Dollar Index. The Japanese yen rose by 0.08% against the US dollar, while the Australian dollar (EWA) and the New Zealand dollar rose by more than 0.6% on the day.

European currencies’ reaction to the rate announcement

European currencies (FEZ), which form a major part of the US Dollar Index, reversed their trajectory to trade on a positive note on June 15. The gains were led by the euro and the pound as investors offset their short positions in these currencies. The German DAX (EWG) rose by 0.92%, while the FTSE 100 (EWU) rose by 0.73%. The biggest gainer among European indexes was the Swedish OMX Stockholm 30 Index, which rose by 2.4% following the Fed’s policy release.

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