Growth For US Economy Pushes Dollar Up

Posted January 05, 2011

The US dollar rose for the day. Economic data behind moves.

 

US Dollar

During the Tuesday currency trading session, the US dollar rose against many of its rivals. This came in as a variety of positive economic feedback came in from the US, including a US factory data report that showed better than expected increases. In addition, the Federal Reserve released its meeting minutes in which information indicates that the Fed is more optimistic about the movements of the US economy.

In most situations, good economic data out of the US encourages investors to move towards riskier currencies such as the euro. However, the positive data and the prospects that the US economy may be finally gaining helped to encourage investors to buy into the US dollar. A nonfarm employment report is due out on Friday which could shed more light on the economic conditions in the country from that point of view.

By the end of the trading session on Tuesday, the US dollar index moved the US dollar from 79.152 at the end of North American trading on Monday to 79.433 by the end of the session on Tuesday.

Euro

The euro moved from US $1.3363 at the end of trading on Monday in North America to US $1.3305 by the end of trading on Tuesday. The euro held gains against the US dollar during the early portion of the trading session. The initial information out of the European Union showed that consumer price inflation in the euro zone rose during the last month. It moved to  2.2 percent annual pace, which is up from 1.9 percent in the month of November. The concern is that with higher than expected inflation, the euro zone central bank will be forced to begin removing interest rate limitations currently in place. Though limited information was released in this preliminary document, all eyes point to increases in food, energy and commodity prices as being the reason for the increase.

Investors warned that it is unlikely that the euro will move to the US $1.35 level in the near future. The periphery euro zone could continue to plague the region for some time.

Yen

Against the yen, the US dollar also gained. It moved from Y 81.24 as of the close of North American trading on Monday to Y 82 for the day on Tuesday. The euro also gained against the yen during the session moving up 0.2 percent for the day to Y 109.15.

 

 

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