Posted June 05, 2010
The currency market once again was facing fear during the Friday currency trading session. The euro fell to new four year lows during the session.
During the currency trading session on Friday, the euro fell to its newest level of lows during the day. It sank below the US $1.20 level that many investors consider the psychological level. The euro fell mainly due to risk aversion tactics by investors. Also, US jobs data was not what investors were hoping to see for the day.
Also worrisome to investors in regards to the euro zone sovereign debt problems. The concern investors have is that the debt problems are spreading throughout the region. Riskier assets, such as the euro, simply were being sold off during the day.
The euro's drop during the day also was due to the fears that Hungary would also be added to the list of euro zone countries that are facing difficulties with sovereign debt. The pressure was on as many investors were simply unsure what to expect from the country's new government. No calm was established after officials warned that the country could be facing Greek like fiscal problems. These remarks, made by the election winning vice president of the country caused many investors to flee the currency. In fact, at that point, the US dollar gained four percent against the Hungarian currency during afternoon trading.
US Jobs Data
Of particular importance during the early portion of the session on Friday was the weaker than expected jobs report out of the US. While reports out of the US signaled strong gains in the nonfarm data, currency traders were not satisfied since many of those jobs were created by the US Census Bureau and are part time positions. The lack of more jobs in the US worried investors who see the US economic improvements as a sign of global economic recovery. The lack of significant jobs may signal a less than speedy recovery. As such, many investors pulled away from riskier assets during the trading session and moved to the safety that is found in the US dollar, yen and the Swiss franc.
US nonfarm payrolls increased by 431,000 in the month of May. Economists had hoped to see an increase of at least 515,000.
By The Numbers
By the end of the trading session for the week, the euro had moved from US $1.2156 as of late Thursday to US $1.1972. The euro fell to the lowest level it has been at since March of 2006 during the day's trading session. At that point, it moved to US $1.1961.This low was hit as the US stocks saw significant losses for the day.
The US dollar moved from Y 92.64 to Y 91.54 for the day. The euro moved from Y 112.63 to Y 109.50. The UK pound moved from US 41.4615 to US $1.4474 for the day. The US dollar moved from CHF 1.1565 to CHF 1.1618. The ICE Dollar Index moved the US dollar from 87.240 to 88.225. This marks the highest that the index has tracked the dollar since March of 2009.