Posted September 09, 2010
The US dollar pares some of its losses on Wednesday. Canadian and UK improvements help keep dollar in play.
During the Wednesday currency trading session, the Us dollar took back some of its losses by the end of the trading day. This came after the Federal Reserve in the United States, Beige Book, cited that a slowing economy was in place but that there were limited inflation pressures in place. The US dollar stayed lower, though, after good economic news out of Canada and the UK helped to spur on risk. Investors also approved of the higher US stocks.
One of the factors affecting the currency market on Wednesday was the Federal Reserve Beige Book. This is a document that is a complication of economic anecdotes that is used by Fed officials when they are making monetary policy decisions. The book stated that the biggest weaknesses within the country's economy are in the real estate and construction sectors.
Also important in the US was an announcement by President Obama that outlined significant tax breaks for Americans making less than $250,000 and for businesses. This was done to help boost the struggling economy.
The US dollar improved on the day against the Japanese yen. It make improvements after it hit a 15 year low in the Asian trading hours. This was a sign to Japanese officials that pointed investors to be more apprehensive about the currency's continuing gains. The US dollar moved from Y 83.32 when it hit its 15 year lows to Y 83.94 during the day. It was at Y 83.31 on Tuesday.
Also of interest to currency investors was that the S & P 500 Index rose by 0.9 percent on the day. This helps to give currency traders a signal that the investors are moving towards more risky investments and that those currencies considered safer havens, such as the US dollar and the yen can be sold off for more risky currencies like the euro. The euro moved from US $1.2682 in Tuesday's trading to US $1.2731 in Wednesday's session.
The US Dollar Index moved the US dollar from 82.897 in North American trading on Tuesday to 82.545 by the end of the Wednesday trading session.
One of the biggest movements in the currency market was in Canada. The Canadian dollar moved up significantly when the Bank of Canada raised its target overnight interest rate to one percent. This shows that the country's economy is improving.