Posted August 03, 2010
The euro and yen improved against the US dollar. Economy concerns investors and Fed talk concerns loom.
US Dollar And Economy
During the currency trading session on Tuesday, the US dollar fell against the yen and the euro. This was marked by the disappointing data out of the US, plaguing the country's dollar once more. Investors are concerned that the Federal Reserve may have to take additional measures to help boost the seemingly sagging economy. This caused the US dollar to fall to lows not seen in eight months against the yen and to lows not seen in three months against the euro.
The data out of the United States on the economy continues to pull at investors with concern that the Federal Reserve will need to take more aggressive monetary action to help fix the economy or keep it from a double dip recession.
Investors do not want to seem more extraordinary measures taken as this may further reduce the value of the dollar. Also making investors concerned was information about UBS AG, the world's second largest currency dealing bank. The bank upped its one month euro forecast by six percent this week along. That means that the euro's improvements are more likely to hold fast against the US dollar.
In particular, the news out of the US economy was the US factory orders have fallen by more than was expected in the month of June, from May's numbers. In addition, pending home sales dropped in the month of June by 2.6 percent. That is on top of the 30 percent fall that occurred in the month of May.
The Tuesday currency market focused on the US economy. After a day of more positive moves in the markets, Tuesday marked more concern than ever about the Federal Reserve's most likely next move. The Wall Street Journal reported that the Federal Reserve could be considering significant changes in the way it manages the massive portfolio. That could stop the tightening of the fiscal policy of the country, which is something investors are hoping for, which could boost the US dollar's value in the long term.
Overnight, the US dollar fell overnight significantly against the yen. The yen was boosted against the US dollar after positive comments from the Japanese finance minister.
By The Numbers
At the end of the trading session on Tuesday, the euro and yen looked benefited by the day's concern over the US economy's bleak movements and the worry that the Federal Reserve would further hold back the dollar's improvements to boost the economy.
By the end of the day Tuesday, the euro moved from US $1.3172 as of late Monday to US $1.3233. The euro moved from Y 113.87 to Y 113.60. The US dollar moved from Y 86.51 to Y 85.85 for the day. The US dollar moved from CHF 1.0399 to CHF 1.0390 for the day. The UK pound, after a day of marked improvements on Monday moved from US $1.5889 to US $1.5948 for the day, improving its climb. The ICE Dollar Index moved the US dollar from 80.930 to 80.593.