Sections

You are here: Home › Currency News › US Dollar Higher As Investors Look To Safety

US Dollar Higher As Investors Look To Safety

Added: October 22, 2010

Investors move away from risk. Dollar improves as safe option prior to G-20.

During the trading session on Friday, investors moved towards safe ground with the upcoming G-20 meeting upcoming. The US dollar took back many of its losses from the week earlier. The US dollar is considered a safer option over the riskier euro and commodity based currencies.

The G-20 meeting of financial ministers and central banks is likely to discuss currencies. The meeting is likely to include discussions over exchange rate imbalances. It is not likely that there will be a binding agreement at the end of the session, but some investors are concerned about the likelihood of these changes. Many investors pared its positions in riskier assets in case there is some type of currency agreement that surprises investors.

US Dollar

Investors have long held that the US dollar has perceived strength, and when there is the potential for a shakeup, it becomes important for the investors to turn towards the US dollar over the euro and other commodity based currencies. The weekend meetings of the G-20 nations could put focus on those imbalanced currencies.

A proposal that is backed by South Korea and the United States might provide better support if any caps on deficits and surpluses were nonbinding. The agreement would allow the globe’s largest industrial and developing economies to agree to limits on external imbalances. This would help to rebalance the global growth and push investors away from the over reliance the currencies have towards the US consumer buying goods from Asian countries and other large exporting countries.

By the Numbers

During the trading day on Friday, the US dollars rebound helped to pull the US dollar higher against the Japanese yen. This came as the US dollar had fallen in earlier trading on the belief that the Japanese government is less likely to intervene in the markets to hold back the value of the yen.

By the end of the trading day on Friday, the euro moved from US $1.3922 as of late Thursday barely changing at US $1.3923 for the day. The euro moved from Y 113.22 to Y 113.46 by the end of trading on Friday. The US dollar moved from y 81.35 to Y 81.41. The US dollar moved from CHF 0.9679 as of late Thursday to CHF 0.9787. The UK pound moved from US $1.5706 to US $1.5667. The ICE Dollar Index moved the dollar from 77.453 to 77.494 for the day.

Document Actions

Currency Manipulation

Posted by Timothy Cain at Oct 26, 2010 01:43 AM

I can’t help but wonder if the G-20 meeting is going to turn out like the China promises to let its currency strengthen. Remember how China made a big announcement and then nothing happened? I think the G-20 will seem to agree somewhat on not manipulating currencies and then will go home and do exactly what they want. The G-20 vowed to avoid currency devaluations which isn’t really what you would call a commitment. The U.S. dollar is going to remain weak and that is going to force the other nations to intervene in the currency market.

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)

Mysterious Euro

Posted by Laura Ingalls at Oct 27, 2010 07:50 AM

The euro is the currency that’s a bit of a mystery to me right now. The trend is continuing strength with blips here and there despite Eurozone massive debt, threats of defaults, strikes, and death defying budget cuts. Of course, stock markets and gold are rising together and that’s a mystery too. It makes me uncomfortable that the markets are acting so oddly and against logic. It also makes me believe that the euro, stock market and gold are all due for a correction. That will be especially true if the predictions of debt default by Greece continue. The euro may still be in trouble but is hiding behind the EU bailout plans right now.