Posted July 30, 2010
Currency investors are concerned about the US economic growth numbers. As such, the dollar fell against the yen.
During the Wednesday trading session, the US dollar fell against the yen, as investors turned towards the safety of the Japanese currency over their fears that economic growth in the US has stalled. Disappointing economic data out of the country and the Federal Reserve’s less than ideal report seemed to hold investors back during the trading session.
US Economic News
Nothing weighed as heavily on the currency markets on Wednesday as the less than ideal economic data. There has been a recent string of data reports released out of the US that have provided investors with a slower growing economy in the US. Investors are watching and wondering if the economic growth may be stalling out. And, this news has been intense enough to draw investors away from concerns about the euro zone’s debt problems. The euro managed to hang on near the US $1.30 mark again on Wednesday as investors shied away from the US dollar.
The Federal Reserve issued more information on the economy on Wednesday. This included a US economic activity report which indicated that the economy only improved modestly during the month of June and the first half of July. This is not the pace that the Federal Reserve, nor investors had hoped for.
Also released was a report that showed that demand for US manufactured goods fell in the month of June. This makes the second consecutive monthly decline. This is another sign that the manufacturing sector in the US is growing at a slow pace. However, economic experts had expected a growth of 1.1 percent, but the reports indicated just a one percent growth.
As with most situations when there is less than ideal economic data released, the Australian dollar, along with the New Zealand dollar fell significantly during the day against the US dollar. This came after reports of domestic data indications for both countries did not look as promising as investors had hoped for. These currencies are commodity based; when the economic conditions improve, the currencies often do as well.
Also notable was that inflation rose less than expected in the second quarter of 2010 in Australia. This kept the Reserve Bank of Australia from raising interest rates prior to 2011. The country’s bank had raised those rates consistently over the last six months.
By the Numbers
The Australian dollar fell 1.2 percent against the US dollar by the end of afternoon trading in New York on Wednesday. The New Zealand dollar fell by 0.8 percent against the US dollar.
By the end of the trading day on Wednesday, the euro moved from US $1.3006 as of late Tuesday to US $1.2988. The euro moved from Y 114.37 to Y 113.54. The US dollar moved from Y 87.97 to Y 87.44. The US dollar moved from CHF 1.0600 to CHF 1.0569. The UK pound traded from US $1.5590 to US $1.5585 for the day. The ICE Dollar Index moved the US dollar from 82.138 to 82.132.