Currencies Rise Against US Dollar

Posted August 20, 2010

The US dollar fell against the Canadian dollar and the UK pound. Euro falls during trading day.


During the currency trading session on Wednesday, the world's currencies responded to concerns about risk, economies and the overall ability for investors to look the other way when it comes to euro zone debt and financial worries.

UK Pound

The UK pound had an improved trading session on Wednesday against the US dollar. It moved away from the three week low it had reached against the US dollar. That occurred right after the Bank of England's report on the country's economy. That report showed a better economic outlook than what was expected. 

Numerous reasons exist for the improvement of the UK pound and the country's economy. Many believe that the country's belt tightening to improve the fiscal policies of the country is playing a role. It has lead to some reduction on the country's expectations for future growth, though, some experts state. Within the Bank of England, some of the members of the Monetary Policy Committee are voting for an expansion of quantitative easing, commonly called just QE. This is an asset purchasing program that helps to improve the down trodden economy. If a new method of improving the economy in the United Kingdom would have been offered, this would have likely led to a lower UK pound during the trading session. 

While investors saw the UK pound in a positive light during the Wednesday trading session, most economists believe that there could be reason to doubt this will continue. It is likely that infalation expectations are likely to fall. That will slow growth in many cases and in return, the pound will likely fall during the medium term, experts warn.

Canadian Dollar

Also important during the trading session on Wednesday were the movements of the Canadian dollar. The Canadian dollar took on the role of prominent currency during the day after it managed to spike higher than normal, upon a possible corporate takeover.  

The news in the Canadian market had to do with positive effects coming from the BHP Billiton LTd's recent announcement and bid on Potash Corp of Saskatchewan Inc. BHP offered some CAN $38.56 billion for the company on Tuesday but this was rejected by the company's board. The company is likely to announce a new bid, targeted right at the shareholders.  This could cause the Canadian dollar to see a significant boost, when demand for Canadian dollars to pay for the acquisition occurs. 

By the Numbers

During the currency trading session on Wednesday, the US dollar moved from Canadian $1.0333 as of late Tuesday to Canadian $1.0292. The euro fell against the US dollar after hitting above US $1.29 during the day. 

The UK pound moved from US $1.5572 as of late Tuesday to US $1.5605 by the end of the day Wednesday. The UK pound moved as high as US $1.5687 before the stock market in the US caused it to fall back. The euro moved from US $1.2879 to US $1.2860. The euro moved from Y 110.12 to Y 109.87. The ICE Dollar Index pegged the dollar at 82.236 on Tuesday to 82.259 on Wednesday.