US Dollar Improves on Euro Zone Concern

Added: November 24, 2010

The US dollar continues to climb. Euro zone concerns hold back investors.

US Dollar

During the Wednesday currency trading session, the US dollar again improved against the euro and numerous other major competitors. Investors are still very concerned about the euro zone debt concerns, even as positive economic data was released. In early trading during the session, the US dollar did fall against other currencies. This came as the jobless claims were released showing a job in those numbers. The Federal Reserve hopes that the recovery would help to improve global economy strength. This information pushed investors towards the riskier, and potentially more profitable, euro and other currencies.

During the trading session, the US Dollar Index showed the US dollar moved from 79.716 as of late in the day on Tuesday in North American trading to 79.756 by the end of the trading session on Wednesday. It did manage to reach 79,386 during earlier trading.

Euro

The euro moved from US $1.3364 in the North American session on Tuesday to US $1.3334 by the end of the trading day on Wednesday. Prior to the day’s trading in the US, the euro fell to US $1.33 for new two month lows not seen since September.

Although positive US economic data pushed the euro higher as investors turned towards riskier currencies, there was still significant concern over the sovereign debt crisis that was brewing in Europe. Europe’s periphery countries such as Portugal and Spain continue to hold down the ability for the euro to expand. The negative news about debt in these countries continues to hold down the positive data coming out of Germany. Although investors believe that the Portugal debt can be managed under a European Union and International Monetary Fund bailout, other countries are looming in the background with further debt concerns. This unknown factor concerns investors.

German business sentiment reports were issued during the day, which showed that the numbers had improved to the highest level since the reunification of the country.

Australian Dollar

During the trading session, the US dollar improved by 0.5 percent against the US dollar, moving it to 98.13 cents. This currency is traded heavily positive when good economic data is released, like that coming out of the US.

Canadian Dollar

The Canadian dollar moved up by one percent during the session against the US dollar. This currency is also a commodity based investment, therefore improving when economic data is positive.

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Aussie Housing Market

Posted by Jeanine O'Reilly at Nov 30, 2010 02:50 AM

Australia’s economy is improving quite nicely. The Aussie housing market is doing much better than the U.S. and UK housing market. The Fannie and Freddie problem in the U.S. hasn’t been resolved and one day you will pick up the paper or read online news and discover the U.S. has to bail them out for billions. In fact, I’m not sure why it hasn’t happened already. It will be another TARP type funding. But all it will do is bail out Fannie and Freddie like the government bailed out the auto companies. It won’t save any of the 15 million houses still to be foreclosed. The U.S. dollar will take a big dive against the Aussie in the near future. Maybe one day a lot of this uncertainty will disappear but it’s going to be another year.

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Cost of Insuring Debt

Posted by Julian Zang at Nov 30, 2010 02:50 AM

There is no way that Ireland is the last Eurozone country needing a bailout. Ireland is actually kind of a surprise in some ways because most people thought Spain and Portugal would need help long before Ireland. And what would have happened if the UK had not stepped up and given Ireland a loan? Portugal seems to be limping along but I expect more bad news out of Spain. The euro is not stable right now. Investors are waiting for more bad news. The declining euro is also going to impact the cost of insuring the cost of debt defaults in the Eurozone. The market is in turmoil and a large currency drop of euro-dollar could happen at any time. You can feel the tension in the market.