Posted August 14, 2010
The US dollar improved against the euro and the yen. Investors are turning away from riskier investments.
During the trading session on Friday, the US dollar gained against both the euro and the yen, and numerous other competitor currencies. The economic concern is what is holding other currencies, perceived as higher in risk, to be avoided by investors. Economic growth pushed investors back to the safety of the US dollar.
The euro fared poorly for the day, as a direct result of the economic slow down investors believe may be occurring globally. Further, the euro fell as worries about the negative effects of austerity measures in place in numerous countries in the euro zone surfaced again. By the end of the day's trading in New York, the common currency had fallen significantly. During the trading day, it fell to the lowest level US $1.2752 it has been at since July 22nd. It also fell to a six week low against the UK pound and dropped to a free three week low against the Swiss franc.
The movement of the euro was due to the move away from risk and into what many investors consider to be safer options in the US dollar and the yen. All of this stems from a week of poor economic information pouring out of the world's biggest economies.
In this week alone, the euro feel by 3.9 percent. The fall of the euro was slowed on Friday as compared to the earlier portion of the week, as the US stock markets managed a bit of a less drastic change than the stocks were moving in the early portion of the week.
After an impressive improvement this week, though for a safe haven rather than improvements in the strength of the dollar itself, the dollar did manage to rise against the yen. During the Friday session, the US dollar improved for the second day in a row against the Japanese currency. This happened as the Japanese government seemed more likely to slow the growth and to combat the strength of the yen.
In addition, information out Friday included US data such as the consumer price index, key consumer sentiment index and the retail sales reports. Each showed only a slight improvement. This is what economists had expected the reports to offer. These reports failed to offer investors any reason to move away from their more pessimistic outlook. These improvements were countered by a downgrade in the future growth estimations and the hiring levels by economists.
By The Numbers
By the end of the day Friday in New York trading, the euro had moved from US 41.2833 as of late Thursday to US $1.2757. The euro moved from Y 110.23 to Y 110.21. The US dollar moved from Y 85.90 to Y 86.28 for the day. The US dollar moved from CHF 1.0499 to CHF 1.0516 for the day. The UK pound moved from US $1.5581 to US $1.5601. The ICE Dollar Index moved the US dollar from 82.569 to 82.801 for the day.