Posted July 14, 2010
During the Monday currency trading session, the US dollar managed to improve against most currencies. Investors turned to less risky ahead of week.
The US dollar’s value improved throughout the trading session on Monday as investors headed to higher ground ahead of a week that will likely test the euro significantly. The US dollar managed to gain against most of its competitors during the day. Investors are cautiously eying the upcoming debt auctions that will occur throughout Europe. They are also anxious about the US second quarter earnings that will be released.
The waiting game was on for the euro during the currency trading session on Monday. Invests were still very cautious even though many believe that the news out of the US will not be anything too significant either way. Nevertheless, the quarter’s earnings report that is due out could determine what happens with the US dollar and euro. Most investors believe that the data reports will be strong, even though numerous recent economic reports out of the US have been less than ideal.
One of the currencies weighing in by mid afternoon during the Monday session was the UK pound. It fell against the US dollar after the ratings agency Standards & Poor added some information. The agency affirmed that the UK’s top shelf credit rating, which it has recently struggled to keep. However, the agency did state that it has a negative outlook for the country which is due to the amount of debt the county has. This could, eventually, lead the agency to dropping the AAA credit standing for the UK. The country has made recent significant changes to its fiscal policy as a way of tightening its belt. This news, in light of those moves which many saw as very positive moves for the country, shows that the UK still has work to do.
By the Numbers
By the late afternoon on Monday, the currency markets had turned to a very cautious session. The euro moved from US $1.2640 as of late Friday to US $1.2593. The euro moved from Y 112.07 to Y 111.455. The US dollar moved from CHF 1.0559 to CHF 1.0613. The UK pound moved US $1.5066 to US $1.5022 for the day. The ICE Dollar Index moved the US dollar from 83.914 to 84.213. This was by 2pm on Monday.
The euro was part of the movements in the market on Monday as well. Investors seemed nervous about the debt auctions that were scheduled to occur in Portugal, Spain and Greece. Should the debt auction go well, this, along with good results from the bank stress tests that are scheduled to occur next week, could help to improve the euro’s outlook. Both would indicate that the debt problems in the euro zone have not hurt the banking system there. Many believe that if both of these events occur, the euro could improve over its psychological level of US $1.30 by as earn as next month. This would be a significant improvement over the euro’s low high in early June of US $1.1876.