Posted October 03, 2010
Comments out of the Federal Reserve push dollar lower. US dollar falls against major rivals.
During the Friday currency trading session, the US dollar continued a near week long fall against many of its competitors. Investors weigh potential for Federal Reserve to use stimulus, even though more positive US economic data was released.
Fed and Economy
During the Friday session, much of the focus was again on the Federal Reserve and whether or not stimulus would occur. Federal Reserve Bank of New York President, Mr. William Dudley stated in a speech that it was almost certain that the Fed will extend new support to help ensure that economic growth continues. He did not say what type of stimulus he hopes for, but said that "The current situation is wholly unsatisfactory." He continued with, "both the current levels of unemployment and inflation and the time frame over which they are likely to return to levels consistent with our mandata are unacceptable."
There was good economic numbers out during the trading session, including a slightly higher report from the Institute for Supply Management manufacturing data. This did not help to improve the US dollar though and it continued to move down against the euro.
Against the euro, the US dollar has fallen significantly. The euro did make it to a six month high of US $1.37 during the day's trading session. The euro also benefited during the day from the run up in risk that came from improved numbers that were better than expected in Chinese manufacturing data, which occurred overnight.
The US dollar did fall back against the yen during the day as well. It moved close to Y 83.15 during the day. This is the level that the yen was at when the Japanese officials intervened in the market in the middle of September to help control the increasing value of the yen. Some investors believe that the Japanese officials will again intervene if this level is hit again.
By the Numbers
By late in the afternoon on Friday in New York trading, the euro had moved from US $1.3632 as of close of business on Thursday to US $1.3784. The euro moved from Y 113.72 to Y 114.81 during the day. The US dollar moved from Y 83.44 to Y 83.32. The US dollar moved from CHF 0.9821 to CHF 0.9736. The UK pound moved from US $1.5706 to US $1.5841. The ICE Dollar Index moved the US dollar from 78.762 to 78.076.