Posted June 02, 2010
Currency traders put their focus on economic recovery concerns during the trading session on Tuesday. Sovereign debt could slow recovery, some believe.
The euro moved to new lows on Tuesday as currency traders were concerned with the euro’s ability to withstand the debt concerns of many countries. The euro dropped to new four year lows during the currency session. The concern is that the euro zone’s sovereign debt problems could stymie the ability of the world to move into a global recovery. This concern pushed investors out of the more traditionally risky assets.
The euro was able to pull out of its lowest points during the day, mainly because of the positive economic data that was released from the United States during the trading session. Nevertheless, the euro still feel by about 0.5 percent for the day’s trading.
The US dollar was able to improve across the board on Tuesday. It was able to move modestly up against most of its major currency rivals. The economic data out of the US helped this along but most was due to risk aversion tactics of currency investors.
The US economy continues to offer good news to investors. The Institute for Supply Management released information on Tuesday that showed that the May manufacturing index moved from 59.6 in March to 60.4 in April, to a reading of 60.4 in Mat. This reading was better than what was expected. The rate was expected to come in at 58.7 that was expected by most economists. Any reading in this sector that is higher than 50 signifies that there is growth within the industry.
By The Numbers
By the end of the trading session on Tuesday, the euro moved from US $1.2301 as of late Monday trading to US $1.2237 on the day. During the overnight, the euro feel to as low as US $1.2110. This level is the lowest the common currency has seen since April of 2006. The euro moved from Y 112.40 during the day to Y 111.44 by the end of the session. The US dollar moved from Y 91.09 to Y 91.11. The US dollar moved from CHF 1.1550 to CHF 1.1570. The UK pound moved from US $1.4545 to US $1.4647. The ICE Dollar Index, which measures the euro against its major competitors moved from 86.508 to 86.676 by the end of the trading day.
Also newsworthy was information from Canada. The Canadian dollar was able to gain significantly against the US dollar. This occurred even after the country’s central bank raised the key lending interest rate in the country, which was lowered to record lows during the economic downturn. The move by the Bank of Canada made it the first of the Group of Seven leading nations to make the increase, though other banks have promised to do so in the near future.
During the trading session on Tuesday, the Reserve Bank of Australia left interest rates at 4.50 percent rather than increasing them. This was the first time since February the bank did not raise rates.