Posted June 12, 2010
The Friday currency session saw the US dollar improve again. Risky assets were shed by investors.
The US dollar improved during the currency trading session on Friday. The dollar gained as a direct result of the investor's need to shed riskier assets particularly because of concerns that the global recovery could be slowing. This is in direct contrast to the way the view investors had just the previous trading session.
In particular, news out of the US on their retail sales caused the most alarm for investors. The US retail sales data released on Friday for the month of May showed a reduction of 1.2 percent. However, economists had predicted an increase of 0.2 percent in the industry for that month. The 1.2 percent decline was the largest and the first fall back since September of 2009. At that time, retail sales fell 2.2 percent in the heat of the financial crisis.
Also released out of the US on Friday were data figures on consumer sentiment levels. This news was more positive. It showed that consumer sentiment levels improved in the middle of the mouth, moving the index from 73.6 in May to 75.5 in June. In April it was 72.2. Economists expect for that number to stay around 74.0 for the time being.
By the Numbers
The amount of movement in the currency markets was less than normal this Friday. This may have been due to the end of the week normalness, but it was also due to restrained movements by traders unsure where the euro was moving. Even the World Cup of Soccer is said to have played some role in the slowness of the market.
Nevertheless, currencies moved. As of late Thursday, the euro stood at US $1.2138 and moved to US $1.2077 by the end of Friday's trading day. The euro moved from Y 110.84 to Y 110.65. The US dollar moved from Y 91.30 to Y 91.62 for the day. The US dollar moved from CHF 1.1426 to CHF 1.1508 for the day. The UK pound moved from US $1.4708 to US $1.4516.
Collectively over the week, the euro did make some strides. It was at US $1.1876 during Monday's lowest point against the US dollar, a low that it had not seen since March of 2006. The euro has fallen by more than 15.5 percent against the US dollar for the year.
Also notable during the day's trading was the concern with China's inflation. China's economy is moving head. Chinese inflation was moving up, in a report released overnight by the Chinese government. This is occurring along with the fact that the industrial output was moderating in the country. This may lead to China using fiscal policy to slow the rapidly growing economy. In turn, this could hurt global recovery.
Also important was a report out of the UK on the manufacturing output. The report released on Friday showed an unexpected fall in the month of April. This comes after the country saw a sharp increase in these numbers the month before.