Posted June 08, 2010
During the currency trading session on Monday, the euro was able to gain slightly during the session, but it held on to lows. Debt continues to be the worry investors face.
During the currency trading session, the euro was poised to gain. The euro was improving by mid afternoon. It had previously fell to levels that the common currency has not seen since March of 2006. However, during the afternoon trading session, the euro was not able to break through the key psychological level of US $1.20. The struggle with the US dollar was weighed down in part because of investor’s concerns about the euro zone’s sovereign debt issues. The worry is that these debt problems could spread to other euro zone countries outside of the ones they have already spread to.
The lower valued of the euro may have contributed to a boost in German exports, though. German factory order data showed an increase after the country had the worst performance in 60 years in 2009, when it dropped by five percent.
Investors are concerned that the euro could drop to as low as US 1.1645 in the near future, especially with debt crisis concerns continuing.
During the late morning trading session, the euro did fall to its lowest ever market against the Swiss franc. At the time of the fall, investors were waiting and watching for the Swiss National Bank to jump in and intervene to slow the increase of the franc. However, even as the euro fell and the franc’s value increased, there was no sign of the Swiss National Bank intervening in the markets. The euro held on to these lows through the afternoon.
Investors have turned more heavily to the Swiss franc away from the euro mainly because the Swiss franc is safer. In addition, the country of Switzerland has a stronger economic position than that of the euro zone, and was likely to continue growing as compared to the euro zone. Investors continued their trend of risk aversion by moving from the euro to the franc.
Monday Afternoon Figures
By the afternoon trading session, the numbers looked as follows. The euro had moved from US $1.1962 as of late Friday afternoon to US $1.1941. The euro moved from Y 109.56 to Y 109.55 by the afternoon trading session. The US dollar moved from Y 91.60 to Y 91.78. The US dollar moved from CHF 1.1623 to CHF 1.1617. The UK pound moved from US $1.4499 to US $1.4472 during the afternoon session. The ICE Dollar Index showed the US dollar moved from 88.271 to 88.387 for the afternoon.
The International Monetary Fund also issued a warning on Monday that euro zone countries needed to take action to restore their fiscal sustainability. Each country within the euro zone needs to make decisions that will encourage economic growth while also making fiscal improvements. Country specific structural reforms are necessary, the IMF says, in order to encourage economic growth within the countries and to help reconstruct the pressures that each country is facing within the financial sector.