Posted November 03, 2010
The US dollar improves. Currency traders focus on Fed meeting.
During the trading session on Monday, the US dollar managed to move up for the day after an earlier decline. It feel early in the session against various other major currencies. This initial drop in the day came after the US incomes report showed that the month of September showed a loss. Further, it showed that the consumers spent more out of their savings. This turned around, though, after the Institute for Supply Management reported that the US manufacturing activity in the country rose to 56.9 in the month of October. That was higher than what most experts expected.
The confusion in the reports pushed investors away from the US dollar. It also grew some anticipation for the Federal Reserve's meeting, which is scheduled to occur later this week. The US dollar had dropped sharply when investors expected that the Fed would announce some type of large scale bond program. This type of program might boost the US economy but would weaken the US dollar considerably. There is no indication if and when the Fed will announce such plans, though.
The US Dollar Index moved the US dollar from 77.205 as of late Friday during trading to 77.263 on Monday.
The euro moved from US $1.3908 as of late Friday during trading to US $1.3888 at the end of North American trading on Monday.
The UK pound moved from US $1.6033 as of Friday's trading session to a nearly unchanged US $1.6034 at the end of the day Monday.
The Japanese yen, which the US dollar has been falling against, moved from Y 80.48 as of Friday to Y 80.48, showing very little in actual gains. During Asian trading, the US dollar was much higher than the yen. It was able to rise as high as Y 81.55 using the EBS trading platform. However, that high was a very brief flux and most data feeds did not capture it.
The Bank of Japan will meet after the Federal Reserve meeting. The Federal Reserve is scheduled to meet on Wednesday while the Bank of Japan will meet on Thursday and Friday of this week. The Japanese central bank had originally scheduled this meeting for later in the month but wanted the immediate opportunity to intervene in the markets if it was deemed necessary after the Fed meeting. It is likely the Bank of Japan will take steps to match the Fed's movements as needed.