Posted March 26, 2010
The Euro rebounded on Friday during trading as the Greek debt concerns subside. The dollar falls as a result.
In the currency markets on Friday, a rocky road was the route taken. Only the Mexico peso gained in value against the US dollar. In fact, the peso was the only currency to gain against the dollar the entire week. The Mexican currency increase was due directly to the strengthening of the United States economy. When the economy in the U.S. is strong, the demand for Latin American exports increases, thereby fueling those economies.
By the numbers, the peso moved up 0.7 percent against the US dollar from 12.5854 as of March 19th to 12.4962. Over the year, the peso is up 4.8 percent against the dollar. This is the best performance of any currency in the 16 major currencies.
During trading on Friday, the euro took back some of the US dollar's gains. Currency traders breathed a sigh of relief as the European Union announced a package that would help to bail out Greece from its debt problems. On trading on Friday, the euro moved from 1.3277 to 1.3410 against the US dollar. The US dollar fell from ten-month highs against the euro in the previous week.
The news about Greece seemed to provide a stabilizing force for the 16-country euro zone. A deal was struck in which the 16 countries of the euro zone will provide low interest loans to Greece in combination with the aid from the International Monetary Fund. However, not everyone was confident in the deal, which may have held back the euro from rebounding farther in the day's trading. Not everyone is happen that the IMF needed to be used to bail out the country's debt, leading to beliefs that the euro zone was less than capable of handling its debt concerns. Nevertheless, sentiment was that some type of deal was better than no deal at all.
By The Numbers
In other trading news, the dollar fell against the yen. It moved from 92.67 on Thursday to 92.52 by the end of the day Friday. The US dollar also moved lower against the Swiss franc. It moved from 1.0733 to 1.0652. The British pound, however, moved from 1.4814 against the US dollar to 1.3410.
The Australian dollar did well in trading. As investors turned back to the euro now that the debt issue seems in hand, risk-sensitive currencies like that of the Australian dollar were more appealing to investors. The Australian dollar moved from 90.93 at the close on Thursday to 91.1 US cents by the end of trading on Friday.
Also important this week is the Obama administration's calls on China to adjust its currency value gap. US Treasury Secretary Timothy F Geithner made comments on Wednesday saying that the administration was unable to force China to adjust their currency. However, he did say that he believes that the country will do so. Currency traders and the US government are concerned that the Chinese government is keeping its currency value low to ensure its goods remain inexpensive on the markets.