Posted May 08, 2010
The euro was able to improve during currency trading on Friday. This was due mainly to the relative calm mood of investors on the day.
While the euro was able to make a small rebound during trading in Friday, investors across the globe are still seeing it as a major risk. It is likely to take further losses in the future, investors believe. Perhaps the best way to see the improvements today is to look at what German Finance Minister Wolfgang Schaeuble had to say. He said that solidarity with Greece, concerning its debt crisis, cannot be allowed to fail. That helped to improve speculation on what could happen to the country's debt situation.
In recent weeks, talk of the euro zone's growing debt problems apart from that of Greece continues to mount. As such, Italy was grouped with other countries that are being monitored by investors for signs of debt trouble. However, during the trading session on Friday, Moody's Credit Services made some positive statements about the country, stating that the country has an encouraging record for turning around its debt trends. That helped to give the euro an extra boost as well.
Also notable is that there is a wait in place by investors as they speculate about whether the parliaments of Germany and Italy have voted to support the Greek debt bailout.
As a new government is in the works for the UK, the pound is very much in limbo. UK politicians need to negotiate a new government based on the results from the general elections held on Thursday. Incumbent Prime Minister Gorden Brown is working towards an alliance between the Liberal Democrats and his Labour Party. Because of this unease and concern, most investors in the UK pound are holding on, waiting to learn the outcome from the negotiations.
Further, the new government will need to pull together a financial package that will protect the UK's credit rating, as international credit agencies look to it. A fiscal package will need to improve the UK's debt.
Also helping to improve the overall mood within the currency markets was more encouraging news about the United States. In news released today, the latest non farm payrolls data was announced and it showed a nice and unexpected rise of 180,000 jobs in April. That was after the 162,000 increase seen in March.
By the Numbers
By Friday afternoon, the euro moved from US $1.2599 as of late Thursday trading to US $1.2732. The US dollar moved from Y 89.92 to Y 91.70. The euro moved from Y 113.26 to Y 116.71. The US dollar moved from 1.1123 CHF to 1.1092 CHF. The UK pound moved from US $1.4832 to US $1.4800. The ICE Index (a measurement of the US dollar against several trade weighted currencies) moved from 84.910 as of Thursday to 84.494.
Currency markets will likely be volatile going into Monday's trading as well, especially as concern over Portugal and other euro zone country debt concerns hold it back.