Chinese Rate Holds US Dollar Back

Added: December 13, 2010

US dollar down on Chinese rate decision. Investors look for week of information.

US Dollar

During the currency trading session on Monday, the US dollar fell after a string of increases in value last week. A number of factors weighed on the minds of investors, holding back the US dollar. The US dollar gave back many of the improvements it made against the UK pound, euro and the Japanese yen. It also led to the stocks and commodities in the US to gain ground.

All of this occurred specifically due to the Chinese economic data released during the Monday trading session. The data was strong and the country made the decision to remain at its current interest rate, without raising the level. This encouraged investors to move towards the higher risk currencies throughout the currency session.

Stronger global growth is one of the factors that pushed the investors to the riskier assets especially to commodities and stocks. The US dollar lost because investors view it as a safe bet in a weaker market. The US dollar moved from 80.067 as of Friday in North American trading to 79.281 by the end of the trading session on Monday, in the US dollar index.

Euro

The euro was pushed ahead during the Monday trading session as the appetite for risk improved. Investors also hoped that meetings later in the week would help bring the European officials together to make key decisions about the euro zone’s financial concerns. This helped to boost the euro even farther. The euro moved from US $1.3232 as of the end of the Friday trading session in North America to US $1.3403 by the end of the Monday session.

Japanese Yen

During the Monday trading session, the US dollar fell against the Japanese yen. The US dollar moved as high as Y 84.35 during the session. However, it lost its gains from earlier in the session. The US dollar moved from Y 83.91 as of the end of trading in North America on Friday to Y 83.40 by the end of the Monday trading session.

US Treasury yields turned down during the Monday trading session, which caused the US dollar to pare many of its gains during the session. Prior, the yields had reached its highest level since the month of May in overseas trading.

UK Pound

Against the UK pound, the US dollar fell. The UK dollar moved up by 0.04 percent to US $1.5870 for the day.

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China Global Economic Leader Already in Some Ways

Posted by Laura Ingalls at Dec 29, 2010 04:12 AM

Saying that China will one day be the world’s economic leader is a bit ludicrous at this point. Whatever China does impacts at least half the world now. You don’t have to talk about the future. The recent one-year lending rate increase is a good example. It was expected. The US, Australia, New Zealand, the Asian countries and half of Europe were waiting to see what China would do because even a slight move on their part has enormous consequences on world exports and currency values. China’s economy is improving so rapidly that they are having to take steps to dampen growth while the rest of us are wondering when the recovery will actually impact consumers struggling with massive unemployment. Notice China is still manipulating its currency. This is a country that pretty much acts alone and the rest can just try to hang on and stay caught up.