Posted January 18, 2012
The week's trading centered around the risk involved with the euro. The investors kept the US dollar as their strong and stable currency for the week as they shied away from investing in the euro. By the end of the week, the euro would drop by more than .04 percent from the US dollar. And, the drop in the credit ratings of sovereign countries would also cause a number of problems for investors who continue to be worried about the financial stability of the euro.
The currency market started the week with the dollar falling. Investors reversed bets against the euro after the currency fell last week. The previous week, it fell to a 16 month low versus the US dollar. Investors hoped to see the currency improved this week. The US dollar index moved the currency from 81.47 at the end of Friday in North American trading to end the Monday session at 81.001. It did manage to get as high as 81.47 during the day's trading prior to retreating. The euro moved from US $1.2725 on Friday to US $1.2765 by the close of business on Monday. The US dollar bought Y 77.01 on Friday and, by the end of Monday's session bought Y 76.87.
The Tuesday trading session saw the US dollar fall some against the commodity linked currencies. It fell against the euro as well as the Austrian dollar and the Swiss frank. The US dollar index slipped to 80.864 for the day. Against the euro, the US dollar struggled as well. It moved to trade at US $1.2778. The US dollar bought Y 76.83 against the Japanese currency. With the Swiss National Bank's chairman abruptly resigning, investors were worried about the outcome.
The Wednesday session saw the US dollar coming back up and reclaiming some of the loss it saw on Tuesday. Investors turned away from the euro, and that meant that it fell back under the psychological point of US $1.27 for the day. Investors were waiting and watching to see what the European Central Bank meeting would play out, as well as the European auctions in place. The US dollar index moved to 81.313 by the need of the session. The euro moved to US $1.2661 by the end of the day. Against the Japanese yen, the US dollar bought Y 76.87.
The Thursday trading session saw the US dollar fall against the euro during the day. It would manage to fall to the lowest level that the currency has been at in more than a week. This occurred after the European Central Bank's President helped to fuel confidence during the trading day. President Mario Draghi said he was confident about the effectiveness of the long term lending operations the bank had taken under. This pushed the US dollar index to 80.799 by the end of the day. The euro traded at US $1.2826.The US dollar bought Y 76.77 for the day.
On the final day of the week, the euro fell more than a full percentage point. Credit rating agency Standards and Poor pushed Austria and France's triple A rating lower. It also cut into seven other euro zone sovereign ratings lower during the day, including Italy, Portugal, Cyprus, and Spain. This pushed the euro lower to US $1.2677 during the day. For the week, the euro was down by 0.4 percent. The US dollar index moved to 81.459 for the day. This pushed the dollar index higher by .03 percent for the week. The US dollar bought Y 76.90 by the end of the day's trading.