Posted July 04, 2010
The US dollar fell on Thursday, along with the yen. Investors worry that a US recovery slowdown is occurring.
The United States dollar performed poorly on Thursday against the euro. The yen fared poorly as well. The news out of the US on its economic improvement worried investors, since worse than expected data was released again. Many investors are worried that a US recovery is slowing and that stimulus funds boosted the US economy to this point. Investors traded in the US dollar as a precaution.
Investors were specifically concerned with the US economy so much so that it sent the US dollar to the lowest levels it has seen against the yen in the last seven months. Specifically, investors are nervous that a global economic recovery may stall out if the US economy does not grow at the pace they thought it was. The weakness in the US economy, or potential of it, caused the euro to improve, as well as the Canadian dollar.
The euro had a positive day in the markets during the Thursday currency session. The euro managed to improve significantly against the US dollar, over fears that the economy in the US was not growing fast enough. However, the euro was also bolstered by the positive Spanish government bond auction that occurred. This helped to show investors that the region’s banking system was not in the peril many thought it was. This was in despite of the credit agency’s warnings that continue to be released. On Wednesday, warnings were issued that Spain’s credit rating could fall. The euro’s improvement was in part fueled by the Spanish Treasury’s sale of EURO 3.5 billion of five year government bonds.
Because of these improvements in the investor’s eyes, the euro was able to improve past the psychological breaking point of US $1.25 for the day. Throughout the trading day, the euro improved as much as 2.25 percent. It moved ahead to reach the highest point it has been at in the last five weeks against the US dollar.
US Economic Situation
One of the largest fears for currency investors is that a US economic slowdown is in the works. Investors are looking at the economic data coming out of the United States and starting to analyze it more closely. Investors are putting a closer eye on the US economy, just as they have done with the euro zone nations. Many believe that the investor’s move to improve the euro has helped to show that it has fallen enough, and is now improving.
By The Numbers
As of late on Thursday in New York, the euro had moved from US $1.2238 as of late Wednesday to US $1.2515. The euro moved from Y 108.21 to Y 109.58. The US dollar moved from Y 88.43 to Y 87.56. The US dollar moved from CHF 1.0772 to CHF 1.0611. The UK pound moved from US $1.4957 to US $1.5180. The ICE Dollar Index moved the US dollar from 86.031 to 84.534.
The ICE Dollar Index moved the US dollar to the lowest level it has been at since May. This occurred mainly because of the poor US manufacturing and housing data released.