Posted April 14, 2010
The euro failed to hold onto leads in Tuesday trading. The Brazilian real falls in value and Wednesday data could change markets.
In currency trading on Tuesday, the Brazilian real fell slightly against the United States dollar with less volume. The US dollar saw increases, though small, against the euro, which spurred the drop in the real as well. The real moved from 1.7582 real to 1.7595 by the end of trading on Tuesday.
Some investors see reason to believe that the real will improve in value going forward. Foreign investment is flowing into the country and there is placement of overseas bonds by companies from Brazil. These could help to provide more strength in the real going forward. Resistance often occurs at about 1.75 real.
One major factor in the real’s movement is inflation in the country. Last week, the Brazilian government released some figures providing a clearly look on inflation in the country. It showed that inflation gained in the month of March moving to 5.17 percent. That is up from 4.83 percent in February. Because of the increases in inflation, the central bank is likely to increase interest rates in the country when it meets again on April 28th.
The US dollar saw minor gains against the US dollar in trading on Tuesday. The move was due to many investors looking for less risk than the euro affords in the current situation. The US dollar index that measures the dollar’s trade weighted basket of six other major currencies showed a fall to 80.503 in trading on Tuesday, which is a fall from 80.574 in trading on late Monday.
News that is due out on Wednesday could help to encourage the currency markets during trading. A consumer price and retail sales data report will be out from the US government. This could help to provide information about inflation and consumer spending in the country. Ben Bernanke will also provide his economic outlook during a congressional committee meeting during the day.
There are numerous economic pieces of data that are playing a role in the euro zone’s struggle to regain strength against the dollar. The Greek debt is playing a specific heavy role with currency traders. Tuesday saw the first auction after the euro zone partners came to an agreement about lending the Greek’s 30 billion euro to help improve its financial state. They did this at a preferential rate, and it was oversubscribed. The news of this helped to boost the currency and provide a small bit of relief in trading, allowing the euro to climb against the dollar during trading. However, the euro was unable to sustain that hold and fell against the US dollar by the end of trading.
The euro hit as high as $1.3626 in trading but failed to hold this number. By the afternoon, the euro was down by 0.1 percent to $1.3578. Also, the UK pound was virtually flat against the US dollar holding at $1.5367 throughout trading. The UK pound did see some improvement when UK trade balance figures were released, but it too was unable to hold on to any gains for the day.