Posted July 23, 2010
The euro improved Thursday as investors feed on economic data. Risk appetite improves.
During the currency trading session on Thursday, the euro managed to increase against the US dollar. This was fueled mainly due to the improved economic data out of the euro zone and from the US corporate earnings report released during the day.
A day after Federal Reserve Chairman Ben Bernanke’s comments to Congress about the less than ideal economic conditions in the United States caused the euro’s value to fall significantly, the euro managed to increase by more than one percent against the US dollar by the middle of the afternoon trading session in New York.
The euro managed to rise above US $1.29 during the day’s movements. This was due significantly because of the surprising data out of the European manufacturing sector and services sector that showed robust growth. However, the euro was not able to make it to the psychological level of US $1.30 during the session, mainly because investors are still somewhat concerned that the European bank stress test data scheduled to be released on Friday will not be as good as investors hope.
The yen, also considered a safer currency, dropped during the trading session as well. It did not fair well against the US dollar. The yen fell for several reasons, such as the improving market sentiment in the day pushing investors towards more risky investments and because US stocks rallied significantly during the day as well.
Analyst of the market said that investors had turned to the yen in the Wednesday trading session because of the perceived safety of it. However, after today’s release of economic data, investors were more anxious to invest in that risk and moved away from the yen.
US Economic Data
Also important for the market movements for the day was the release of US economic data which was not as negative as previous data releases have been in recent weeks. However, data from the US economy has not approved across the board. Investors are struggling to find a balance between the better than expected euro zone economic data and the soft US economic data.
By the Numbers
During the trading session on Thursday, the euro managed to move up 1.2 percent to US $1.2906 by late afternoon trading. The euro managed to improve to Y 112.20 on the day as well. The US dollar, however, fell by 0.1 percent on the day against the euro while also moving to 86.96 in yen. The session low against the yen for the US dollar was 86.35.
Australian Dollar and Canadian Dollar
Also notable during the trading session was the changes in the Australian dollar and the Canadian dollar. The two currencies improved significantly during the trading day. These two currencies are particularly important as they continue to fluctuate as economic data improves. As improved economic data was released on Thursday, these two currencies improved as they are closely tied to commodity improvement and economic growth. Both are likely to see increases in value as long as investors are looking for risk.