Sections

You are here: Home › Currency News › US Dollar Falls Significantly: Investors Not On China Rate

US Dollar Falls Significantly: Investors Not On China Rate

Added: October 20, 2010

The US dollar feel against euro and other currencies. Investors did not focus on worries that China is slowing economy.

During the Wednesday currency trading session, the US dollar fell significantly, losing most of the gains it accumulated the day before. Investors did not seem to be worried about the efforts of the Chinese government to slow down the country’s economy.

Chinese Economy

Most investors had the view that the Chinese economy was strong enough to handle the small increase in the key lending interest rate China put into place during the trading session. This helped to push investors towards the higher yielding currencies including the Australian dollar and the euro. The Australian dollar, closely linked to economic growth, especially Chinese economic growth.

The indication of Chinese growth in the marketplace seemed to push the appetite for risk in investors, pushing them away from the US dollar, with its perceived strength. Data to be released on Thursday could provide additional information on the Chinese government, and is expected to be good.

US Dollar

During the trading day, the US dollar was pushed lower as the German Chancellor, Angela Merkel noted that the country would be moving away from stimulus measures for the country. This added more speculation on what the Federal Reserve may be moving towards in its likely bond purchase. Many investors believe that they can expect a stronger euro that is based on the seemingly present confidence in the European recovery. Investors are also pushing towards the euro because of the unstable US economy which likely needs more stimulus to continue to growth. That weakened the dollar while pushing the euro higher for the day.

Some reports were circulating in the market that the Federal Reserve will take the quantitative easing method of stimulus and that the decision had been made to do so, though this was not confirmed.

By the Numbers

During the trading day, the US dollar fell to new 15 year lows against the yen, to Y 80.84, though it managed to improve slightly. The euro moved from US $1.3730 to US $1.3949 for the day. The euro moved from Y 112.01 to Y 113.25 for the day. The US dollar moved from Y 81.58 to Y 81.16. The UK pound moved from US $1.5697 to US $1.5840. The US dollar was at CHF 0.9709 at the end of Tuesday session and moved to CHF 0.9627 by the end of the day Wednesday. The ICE Dollar Index moved the US dollar from 78.218 to 77.212.

Document Actions

Let China Alone

Posted by Abdul Hahn at Oct 27, 2010 12:59 AM

So China has allowed the yen to rise by 14.8 percent against the U.S. dollar compared to the baht which has gone up 11.6 percent. The South Korea won has risen 7.2 percent. The Malaysian ringgit has gone up 10.7 percent. These numbers are all for 2010. It seems to me that China is trying to cooperate up to a point and the U.S. should back off. It’s not China’s fault the U.S. doesn’t manufacture much of anything anymore or that the U.S. has to rely on China to buy its debt. It’s poor economic management on the part of the U.S. I realize China has the largest Asian economy but the U.S. wants to keep talking like it owns the global economy and those days are over.

Report Abuse

Name (Required)

Please enter your name.

E-Mail (Required)

Please enter your e-mail address.

Description (Required)

Please state your reasons why you would like to report this comment as abusive. Our administrator will be notified with your message.

Enter the word below (Required)

US Stealth Devaluation

Posted by Sandra Brooks at Oct 27, 2010 10:10 AM

Geithner says he won’t devalue the dollar but if the Feds decide to inject more cash into the economy, isn’t that exactly what will happen? One analyst called it “stealth devaluation” and that’s a good way to describe what’s going on. Bernanke and Geithner were architects of this financial mess and now they’re begging for inflation. And what is going to happen to the U.S. dollar when Fannie and Freddie have to get their billions of bailout? Currency investors are generally a calm lot but you can see some anger starting to emerge for a good reason. Who’s running this show anyway?