Dollar and Yen Climb During Tuesday Trading

Posted May 26, 2010

During the Tuesday trading session, the US dollar and the yen were able to make marked improvements in their values. The increases in these values came up as investors worked to minimize risk.

 

During the trading session on Tuesday, the euro feel again, this time to low levels that have not been seen since October of 2001 against the yen. They dropped to a near four year low against the US dollar as well. The large concerns include tensions between North and South Korea, debt concerns and positive US data. The euro did make a bit of a recovery during the trading session but it was minimal.

Korea


One of the concerns for the day was the  mounting tensions between North Korea and South Korea.  South Korea was forced to defend its currency, the won, with a large intervention. The move was necessary do to the fall of the currency to nearly one year lows. War is something that many are considering detrimental to the well being of these currencies.

By the Numbers

By the end of Tuesday, the euro had moved from US $1.2383 as of late Monday trading to US $1.2328. The euro moved from Y 111.92 as of Monday to Y 110.98 on the day. The US dollar moved from Y 90.40 to Y 90.05. The US dollar moved from CHF 1.1591 to CHF 1.1567. The UK pound moved from US $1.4438 late on Tuesday to US $1.4394 on the day. The ICE Dollar Index moved the US dollar from 86.295 to 86.607 for the day.

Also notable was that the Canadian dollar and the Australian dollar feel during the day's trading. They fell by nearly 0.8 percent. This fall was mainly due to the lack and concern over global growth in the economies.

US Data Boost

Another reason that the US dollar fared well during the currency trading session was due to the economic data released during the day. The markets, including the stock markets worldwide, took a deep breath and exhaled when information showed that the US economy seemed to be strengthening. The US Conference Board's Consumer Confidence index, an all important judge of the way Americas see the economy moving, improved for the third month in a row. It moved from 57.7 in April to 63.3 in May. Economists were impressed with the results as they had predicted a smaller improvement of just 58.5.

Debt Crisis

Even as the American consumer data showed positive signs for the economy, the euro was unable to shake fears from investors. The largest concern for the day was the fact that many investors believe that the debt problems will spill over into other countries moving forward. This was heightened by the fact that the International Monetary Fund issued a warning on Monday directly aimed at Spain that said that unless "radical overhaul" was obtained for the country's labor laws and government pension system reform was "bold" that the country could be heading to the same forecast of that of Greece. The IMF also warned that the country needed to accelerate consolidation of its banks.   

 

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