Good US Data Moves High Yielding Currencies

Posted September 10, 2010

The Australian and Canadian dollars improve against US dollar. Good data shows global economy improving.

 

During the Thursday currency trading session, better than expected data helped to show that the global economy was improving. This helped to push currencies tied to growth higher. 

Canadian and Australian Dollars

The Canadian dollar and the Australian dollar are high yielding currencies tied heavily to global economic growth. As such both currencies improved on the day against the US dollar. The Australian dollar moved to four month highest against the US dollar while the Canadian dollar moved to three week highest against the US dollar. The Canadian dollar was also performing well due to the previous day’s increase in the key lending rate by the Canadian central bank. 

US Data

On Thursday, key monthly trade data was released from the US. In addition, the weekly report on initial jobless claims also was released. Both offered a bit of a bright spot for the economy, pushing the higher yielding currencies higher. 

The US trade deficit contracted significantly in the month of July. This is the largest drop in the last 17 months. This was also a positive sign for the US economy. The number of new claims for jobless benefits fell more than expected in the week prior as well. 

Euro

Even with this positive data out of the US and other countries, the euro still struggled during the day. The euro managed to slip against the US dollar during the day. Investors are looking for more consistency in the markets before they are willing to take on the riskier euro currency. Investors are also worried about the potential intervention of the Japanese officials as the yen continues to rise.

UK Pound

The UK pound did not have a good day, though. The pound fell against the US dollar during the day. The trade deficit in the UK grew to the highest level ever. In addition, against investor hopes, the Bank of England kept the key interest rate the same. 

By The Numbers

During the Thursday trading session, the euro moved from US $1.2716 to US $1.2703. The euro moved from Y 106.72 to Y 106.49. The US dollar moved from Y 83.92 to Y 83.83 on the day’s trading. The UK pound moved from US $1.5465 on Wednesday at the end of trading in New York to US $1.5438. The US dollar moved from CHF 1.0122 to CHF 1.0152. The ICE Dollar Index moved from 82.608 to 82.649 on the day’s trading.

 
 

Comment