Posted September 14, 2010
The euro manages to climb to its highest against the US dollar. Investors focus on higher yielding currencies.
During the currency trading session on Monday, investors turned back towards risk and focused on higher yielding currencies. This comes in the wake of the more promising economic news that was released over the weekend. The euro posted its largest one day gain against the US dollar since trading in the middle of July.
Most of the movements within the currency market on Monday stemmed from the positive economic data out of various countries. Over the weekend, better than expected reports out of China showed promising information about the global economy. Euro zone growth forecasts were revised upward as well. In addition, investors were able to learn of a global banking regulation agreement put in place, which offered some calming to the concerns about the euro zone’s financial sector.
Also important during the day’s trading was the movements with the Swiss franc. The country’s inflation was reported a bit higher than what was forecasted, which increased investor’s hopes that the Swiss National Bank may reach out to increase the key lending interest rate as a way to hold back inflation. The Swiss National Bank meets on Thursday to make this decision.
The US dollar also fell back against the yen. It came, once again, close to the 15 year low it had hit recently. Investors turned away from the US dollar prior to the election of the head of Japan’s ruling party, which was to happen on Tuesday. After the party vote, some investors believe, the new government may be more willing to intervene in the currency markets to stem some of the increasing strength of the yen.
Australian Dollar, New Zealand Dollar and Canadian Dollars
As a high yielding currency, the Australian dollar moved higher. The currency had reached four month highs against the US dollar in the previous week. Both the New Zealand dollar and the Canadian dollar, both of which are tied to economic growth, improved during the day as well.
By The Numbers
By the end of trading in New York on Monday, the euro moved from US $1.2712 as of Friday to US $1.2873. The euro moved from Y 107.03 to Y 107.66. The US dollar moved from Y 84.21 to Y 83.65. The US dollar moved from CHF 1.0197 to CHF 1.0072. The ICE Dollar Index moved the US dollar from 82.723 to 81.870.