Posted August 03, 2010
The euro and the UK pound improved for the day against the US dollar. Good economic news out of the UK helped to push the pound.
The euro moved to three month highest against the US dollar during the Monday currency trading session. The UK pound also improved, to levels not see in six months against the US dollar. This all occurred due to positive information from several countries in the manufacturing data. This helped to spur on investors who are hoping for global economic recovery to occur.
In recent weeks, investors have been worried about some leading economies, such as the United States, in that these economies may not be doing as well as investors had hoped. However, positive economic data out of the UK, euro zone, China and the US all helped to spur on investors to take on the more risky euro zone currency.
All of this positive information helped to push US stocks higher throughout the trading day. It was a significant loss for the US dollar, which has interest rates so low that it is a low yielding currency.
The UK pound continued to improve during the Monday trading session. It was able to move up, continuing its progression since it hit a 14 month low in May. Since that time, sterling has risen by more than 11 percent, due especially to the stronger than expected news about the UK economy and the austerity plan put in place by the new government. Investors who bet against the UK pound have been forced to unwind their trends, which helped to push the UK currency higher.
The Monday trading session was specifically favorable because of the manufacturing data released. In addition, two large euro zone banks offered strong earnings reports during the day. This helped to push the euro to US $1.32, a level it has not seen since May.
The US manufacturing sector managed to produce an important report for the last month, showing it grew for the 12th consecutive month. The readings from the report showed better than expected data as well. Both the UK and the euro zone in general had better than expected manufacturing data as well.
Also notable during the Monday trading session was reaction to the news out of the Chinese government. The government stated in a report over the weekend that manufacturing activity in the country was slower in July than was expected. Investors expect that this is a sign that Chinese growth is moderating, not collapsing.
By the Numbers
As noted, the euro managed to climb as high as US $1.32 for the first time since May. The euro fell as low as US $1.1876 in early June but continues to improve. By the end of the day Monday, the euro moved from US $1.3053 as of late Friday to US $1.3172. The euro moved from Y 112.76 to Y 113.87. The US dollar moved from Y 86.46 to Y 86.51. The UK pound moved from US $1.5695 to US $1.5889. The US dollar moved from CHF 1.0404 to CHF 1.0399. The ICE Dollar Index moved the US dollar from 81.523 to 80.930.