Dollar weaker on less demand for safety

The US dollar retreated Tuesday on reports that three major banks – Goldman Sachs (NYSE: GS), JPMorgan Chase (NYSE: JPM) and Morgan Stanley (NYSE: MS) – have all applied to pay back the money they received through the Troubled Asset Relief Program.

The reports reduced demand for the safe-haven dollar on the assumption that the banks now have enough capital to survive on their own, indicating that a recovery from the recession is under way.

It is unclear whether the Federal Reserve, which must approve the repayments of TARP funds, will allow the banks to give back the money at this time.

In late morning trade in New York, the greenback traded at $1.36 to the euro while the yen traded at ¥96.16 to the dollar and at ¥130.7766 to the euro.

The pound was stronger on better-than expected profits reports from financial services group ICAP (LSE: IAP) and retailer Marks & Spencer Group (LSE: MKS), raising hopes that the UK economy will soon recover from its recession.

At just before 11:30 a.m. in New York, the pound traded at 87.72p to the euro while it took $1.5504 to buy a pound.

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