Posted August 27, 2010
Investors monitor movements of central bank. US dollar improves for day against yen.
During the Wednesday currency trading session, the US dollar managed to improve against the yen. This was fueled in part by the concern investors have over whether or not the Japanese government will come into the picture to reduce the yen's continuously improving strength.
The US dollar's improvement was due on the movements investors made to help counteract the improving yen. Many investors believe that the Bank of Japan is likely to intervene in the currency markets as a way of reducing the seemingly ever increasing value of the yen. This took the focus off of the concerns that continue to come out of the US economy.
The yen, like the Swiss franc, is considered a safer investment in times of economic downturn or uncertainty. Because of the recent concern over the US economy, the yen's value has continued to move up over the last several weeks. This has sent the yen to the highest level it has seen against the US dollar since June of 1995. On Tuesday, the US dollar hit a 15 year low against the yen, moving to 83.58. However, it rebounded to 84.15 before the end of the day.
Also a tool for worrisome currency times, the Swiss franc continued its movements upward during the Wednesday session. This continued during the day due to the less than ideal housing data out of the United States. Because of this, the Swiss franc improved to the highest level it has had against the US dollar since January of 2010. The franc also set a new record against the euro by rising to levels not previously seen.
A big weight on the currency market is the continuous stream of poor economic data that keeps coming from the US. During the Wednesday trading session, data released showing that new home buying in the United States has fallen to the lowest level it has been at since 1963 pushed investors to safety. There was a small amount of rise in US manufactured durable goods posted for the month of July. However, the amount of that improvement was markedly less than what expectations called for.
Canadian, New Zealand and Australian Dollars
As has become normal, the Canadian dollar, Australian Dollar and the New Zealand dollar each fell during the day. Each of the three currencies are often linked to global growth and economic strength. During the later part of the trading session, these currencies did manage to regard some of their losses, as the US equity markets moved back into positive territory in New York Trading.
By the Numbers
By the end of Wednesday, the euro moved from US $1.2674 to US $1.2655. The euro moved from Y 106.64 to Y 107.20. The US Dollar moved from CHF 1.0312 to CHF 1.0291. The UK pound moved from US $1.5433 to US $1.5450. the ICE Dollar Index moved the US dollar from 83.139 as of Tuesday to 83.275.