US Dollar Up on UK Pound

Added: January 25, 2011

The US dollar rises against UK pound. Euro down off 2 month highs.

US Dollar

The US dollar improved on the day against the UK pound. This is the first time that this level of increase has been seen since the beginning of the year. This occurred due in most part to the news out the of UK that an unexpected pullback in the country's economy occurred in the last portion of 2010.

The US dollar fell against the euro during the currency trading session, after a day of wavering on both sides. The US dollar did see some benefits throughout the day due to the strong US consumer confidence reports out during the currency trading session. After the day's trading, though, the euro remained strong as investors mainly due to the strong interest in bonds, the first of which were sold during the session that were underwritten by the European rescue fund.

The US dollar moved during the trading day from 78.013 at the end of the North American trading session on Monday to move to 77.973 by the end of the trading session on Tuesday. The US dollar lost value against the Japanese yen during the trading day. This occurred as Treasury yields fell during the session.

UK Pound

The UK pound was one of the few currencies to lose ground against the US dollar during the session. It moved from US $1.6003 as of late in the trading day on Monday to US $1.5816 by the end of the session on Tuesday.

The euro improved against the UK pound as well. The euro rose by 1.3 percent against the UK pound during the session. This came specifically as the reports indicated that there was a significant drop in the economy in the last quarter in 2010 in the country. Though some blamed the poor weather conditions, others believe the contraction was more directed at the economy itself and consumer confidence waning.

Euro

Against the euro, the US dollar moved from US$1.3647 as of the end of the trading session on Monday to US $1.3682 during the North American session. Although the trading day did include a touch to fresh two month highs against the US dollar, to as high as US $1.3702 during the late afternoon trading, the currency was unable to hold this increase. Investors, though still concerned with the European debt situation, were happy to see robust investing by other countries including Japan, and private firms.

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China in News Too

Posted by Laura Ingalls at Jan 29, 2011 07:37 PM

China has been in the news too because of the state visit to the US and the pressure Obama has been getting from Congress and the worker unions to penalize China for currency manipulation. A reporter spoke with the US Treasury Department’s Undersecretary for International Finance about the Chinese economy and currency. The Undersecretary, Lael Brainard, pointed out something interesting. Everyone is concerned about the Chinese economy possibly experiencing a bubble and the fact the Chinese are propping up their currency. But Brainard pointed out that the US benefits from the fast growing Chinese economy because China is their fastest growing export market. The US workers say they are losing jobs because of the currency exchange rate but Brainard seems to think the rate may be helping China reach a phenomenal 10 percent growth rate.

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Emerging Markets Changing Currency Markets

Posted by Jim Kelly at Feb 01, 2011 07:17 PM

We need to stop worrying about China and start worrying about all the currency intervention going on. Emerging markets are changing the currency markets in ways yet to be fully understood. The problem is that so many countries are now intervening in the forex market to try and weaken their currencies. But at some point interest rates must be raised to prevent inflation. So if you raise interest rates then does that mean more currency intervention is needed? Seems like a vicious cycle that will collapse in on itself at some point. Inflation is beginning to reach levels where action is going to be needed to prevent further increases. So how will currency market intervention be balanced with monetary policy?