During the Friday currency trading session, the US dollar was able to gain significant ground during the day as investors become more concerned than ever about the risk of global recovery. Various factors affected the day’s trading, including the European Central Bank’s announcement that key fiscal policy should remain loose until next year.

US Economic Data

Another of the factors affecting the trading day was the recent stream of bad data out of the United States that shows a weakening economic climate in the country. This continued to be a strong hold in both the currency and the stock markets. Those currencies closely tied to economic growth, including the Canadian dollar, feel against the relative safety of the US dollar during the day. Investors consider the US dollar a safer option in economic downturns.

ECB and French Government

One of the main factors affecting the US dollar’s climb to six week highs against the euro was an announcement out of the European Central Bank indicating that it will keep monetary policy loose until next year. This means that it could offer further stimulus in the coming months if the economic downturn continues. This is not what investors wanted to hear, as many were hoping for tighter restrictions which out allow the euro to improve dramatically.

Investors believe that the speed at which the ECB will move from these economic recovery measures into an improved market will depend on the euro zone’s banks. This was stated as such by the Deutsche Bundesbank President in an interview with Bloodberg TV during the Friday currency session. 

Also hurting the euro during the trading day was a downplay by the French government on its forecast for 2011 growth. 

Japan

Also in the news was the Bank of Japan. Although most investors do not believe that the Bank of Japan will intervene in the markets over the yen’s strength, many do believe that the Ministry of Finance will work towards encouraging the government to offer more monetary easing from its central bank in the wake of the less than ideal economic data.

Swiss Franc

The euro also fell against the Swiss franc during the currency trading session on Friday. It fell to the lowest level it has been at against the Swiss franc since early July. The Swiss currency has a perceived safety compared to the euro. 

By the Numbers

During the trading session, the euro fell to below US $1.2735 during the day, which means it is clearly heading towards US $1.2605 and even as low as US $1.2490 according to some investors.

By late in the day, the euro moved from US $1.2820 as of late Thursday to US $1.2706. The euro moved from Y 109.40 to Y 108.71. The US dollar moved from Y 85.29 to Y 85.75. The US dollar moved from CHF 1.0325 to CHF 1.0375. The UK pound moved from US $1.5606 to US $1.5490. The ICE Dollar Index moved the US dollar to 83.237.