Euro Falls But Recovery Still Hopeful
One of the main events during the currency trading session on Wednesday was the information out of the United States. Economic recovery helped to temper the losses that the euro faced against the US dollar for the day. Investors were happy in terms of the growth occurring. In particular, there was better news out of the US manufacturing data released on Wednesday. This positive news helped to stop the bottomless fall of the euro during the trading session. Other riskier currencies, including the Australian dollar, were also protected in this way.
By the Numbers
The euro moved from US $1.2348 as of late Tuesday during trading to US $1.2311 by the end of Wednesday's trading in New York. The US dollar moved from Y 91.40 to Y 91.42. The euro moved from Y 112.86 to Y 112.56 for the day. The UK pound moved from US $1.4814 to US $1.4737 for the day. The US dollar moved from 1.1323 to CHF 1.1297. The US Dollar Index pushed the US dollar from 85.934 up to 86.142 as investors pulled away from the riskier assets during the day.
Though euro zone debt still is on the minds of investors, many were focused on currencies within Spain during the Wednesday session. Against German bonds, there is increasing risk premiums on Spanish government debt widening. New levels are being hit currently, which is worrisome to most traders. German bonds are still considered the safest option for those investing in European debt. Even with these concerns in place, the Spanish government, along with the European Union are providing investors with information that the country was fine. Investors are concerned that the mixture of high deficits that the country is struggling with, alongside the high and ever increasing unemployment in the country, will cause the country to have to turn to the European Union's rescue fund for help.
On Thursday, Spain plans to sell euro 3.5 billion in longer term debt to the market. The market worries today could make this difficult for Spain during that session. Some investors believe that there are building dangers within the country, which is why higher yields have been demanded recently.
Although Spain did cause the euro some trouble during the day, the positive growth information about the economy did put a floor on the euro's falling numbers during the day. The euro was able to hold on above US $1.2250. This is a good sign, many investors say, that the euro may still be holding on to its recent recovery. The euro did manage to hit a two week high this week at US $1.2354, which was seen during the Asian trading session. Still, investors are concerned and watching closely to learn what is happening within the euro zone in regards to the debt concerns here. Many believe that the euro may not be able to hold on to larger gains than it has had this week.