Posted September 29, 2010
The US dollar improved on Monday. The Federal Reserve talk during the day encourages investors.
The US dollar spent most of last week falling after investors took on to the euro with a renewed ability to pursue the euro and other riskier currencies. On Monday, the US dollar was up modestly late during the day against the euro. The move comes as investors scale back investing in riskier currencies after information out of the Federal Reserve is not as favorable.
The Federal Reserve, investors believe, is now more likely to be using an open end, smaller scale program as their means to help boost the US economy, which is not what investors expected the Fed to do. The US dollar was weakening against the euro as well as its other major competitors as investors counted on the Federal Reserve putting into place an asset purchases process called quantitative easing. The US dollar had fallen to lowest it has not been at since April.
Rather, it is more likely, investors believe, that the Fed is using different tactics to purchase long term US Treasury securities. This is unlike what the Federal Reserve did in 2009 when it put in place a massive bond purchase as a way to get the economy moving in the right direction again.
The US dollar did fall on Monday against the yen. It managed to fall to its lowest level against the yen since the Japanese government's intervention in the markets a few weeks ago. Investors watched the market closely to determine if the Japanese officials would once again intervene in the markets to hold back the strength of the yen. Investors were cautious when the US dollar fell to y 84.11, which is the bottom point, investors believe, since the government invested some Y 2 trillion into the market. The US dollar did manage to stay close to these lows for the rest of the session and there was no actual evidence of intervention in the markets.
By the Numbers
As of the end of Monday's trading session, the euro moved from US $1.3493 on Friday to US $1.3444. The euro moved from Y 113.70 to Y 113.25. The US dollar moved from Y 84.28 to Y 84.25. The Us dollar moved from CHF 0.9848 to CHF 0.9857. The US dollar moved from US $1.5833 to US $1.5826. The ICE Dollar Index moved the US dollar from 79.280 to 79.502.