Posted June 09, 2010
During the currency trading session on Wednesday, the euro managed to see some improvement against the dollar. Investors were confident in the prospects of a global recovery, which many believed could happen sooner than expected.
The day's movements in the currency market were mainly due to the news that a global economic recovery was more promising. There were reports issued during the trading session that stated the China would be announcing strong export figures for the previous months. This caused numerous currencies to move. Some reports stated that Chinese exports were expected to improve by some 50 percent for the month of May, which would move them to US $130. April's growth was at 30.5 percent for the country. No news was officially released, though.
Also important was the statement made by Federal Reserve Chairman Ben Bernake. He seemed to provide a cautious but optimistic outlook on the improving US economy. This too helped to fuel the currency trading for the day.
Nevertheless, the improving euro was not as easy ride. By the late afternoon trading session in New York, US stocks fell and that lead to riskier currencies, including the euro to be sold off significantly. Many investors simply were paring their moves the day before the scheduled meeting of the European Central Bank as well. There is no expectation that the European Central Bank will increase key lending rates currently, especially since many of the euro zone countries are still plagued with sizable debt. However, investors will be monitoring the meeting to help them to determine how the bank is going to handle those debt problems that many investors feel will spread throughout the euro zone.
It is likely for investors to take any negative news seriously and it could lead to yet another drop of the euro during the Thursday trading session.
By The Numbers
During the Wednesday trading session, though, investors were more interested in dealing in the riskier currencies. During the day, the US dollar hit a low against the yen. However, many investors were not concerned with this as the yen commonly strengthens when investors are unwinding their bets for higher yielding currencies.
As for the currency numbers for the day, here is how the results looked by the end of the trading session in New York. The euro moved from US $1.1952 as of late Tuesday afternoon to US $1.1988, managing a small but significant gain for the day. The euro moved from Y 109.22 as of Tuesday evening to Y 109.28. The US dollar moved from Y 91.44 to Y 91.15 for the day. The US dollar moved from CHF 1.1530 to CHF 1.1477. The UK pound moved from US $1.4425 to US $1.4530 for the session. The ICE Dollar Index positioned the US dollar at 87.892 which is down from the previous day's 88.092.
However, it is also important to note that the euro did move significantly higher than the benchmark US $1.20 number during the session, but it fell just below that before the trading day ended.