Industry Data Causes US Dollar to Drop

Added: October 18, 2010

US dollar down for day, UK pound falls against US dollar and euro.

During the trading session on Monday, the US dollar fell against the euro due to the cloudy picture on the US economy. The US dollar fell against the euro and pared gains against the UK dollar and the Canadian dollars. This economic input made the debate about whether and how the Federal Reserve will act more active.

US Dollar

During the trading day, many of the gains from the US dollar came from investors who reduced bets against the US dollar and took profit positions on it. That came after the US dollar dollar’s long run lower against the European currency, the Canadian dollar and the Australian dollar. The ICE Dollar Index moved the US dollar from 77.038 as of Friday to 76.922 by the end of trading on Monday. It was able to rise as high as 77.645 during intraday trading. The Index hit its lowest point since December last week.

UK Dollar

The UK pound’s movement during the day stems from the concerns many investors have about the Bank of England easing its monetary policy and the European Central Bank not tightening its policies too soon. Those positions helped to support the US dollar during the day. The UK pound fell by 0.3 percent to US $1.5942 during the day.

Euro

During the trading day, the euro moved from US $1.394 as of Friday evening in North American trading to US $1.3964. It had fallen as low as US $1.3829 during the day’s trading session. The euro’s improvements during the day was due to the US industrial production reports that showed an unexpected slip in the month of September. This pushed investors towards the likelihood that the Fed’s Open Market Committee is likely to boost the economy by allowing monetary policy to ease through a bond buying program.

Yen

During the Monday trading session, the Japanese yen once again improved against the US dollar. The US dollar fell from Y 81.49 to Y 81.23 during the day against the yen. During the previous week’s movements, the yen fell to its lowest level in 15 years, to below Y 81.

Australian Dollar

The Australian dollar was not able to push higher during the day, as it started to do last week, towards parity with the US dollar. It moved from US 98.83 as of late on Friday to 99.43 as of the end of trading on Monday.

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Foreboding

Posted by Timothy Cain at Oct 27, 2010 10:10 AM

There is a feeling of foreboding in the currency market right now. Between the currency interventions and the U.S. talking quantitative easing for weeks now with no action, the tension is palpable. The euro is still threatened too by a lot of things. In fact, they won’t talk about it but the stability of the entire Euro-zone is still threatened. There is a widening gap between countries like Germany and countries like Greece. These austerity measures being put in place are going to be difficult to sustain too. They are one election away from being erased. A shakeup in the Euro-zone could lead to large movements in the euro and pound and who wants to risk such large losses right now?