Posted September 25, 2010
The euro improves sharply during Friday session. Poor US data means Fed may act soon.
During the trading session on Friday, the euro moved up again, after a day of falling back against the US dollar. The euro improved during the day to its highest level against the US dollar since April. The improvement of the euro comes after more poor data out of the US economy becomes evident. That may lead to the Federal Reserve pushing more stimulus methods to improve the slowing US economy. That pushed the US dollar down.
Information out of the US shows that further slowing of the US economy. The economic data out of the euro zone was more positive. Investors expect that the Federal Reserve will initiate a new round of quantitative easy, or the purchasing of assets, to push the economy forward. This method would keep the US dollar inexpensive, allowing investors to purchase riskier currencies easier.
During the day, the US dollar did lose significantly against other major currencies but it remained within a tight range with the yen. The US dollar spiked during overnight trading against the Japanese currency. Some investors believe that the Japanese officials will intervene in the market again, to hold off the yen’s strength. Officials would not confirm that they planned to do so.
Australian and Canadian Dollars
Because of the news during the day, higher yielding currencies, including the Canadian dollar and the Australian dollar improved during the day. Each currency gained about one percent against the US dollar during the day. The Australian dollar improved to its highest level since July of 2008.
The UK pound rose by as much as one percent during the trading day against the US dollar. That is the strongest the pound has been in six weeks. This comes after data out of the euro zone was more positive. This is in contrast to the data from the previous day showing a drop in the economic environment in the euro zone.
By the Numbers
By the end of trading on Friday in New York, the euro moved from US $1.3317 to US $1.3493 for the day. The euro moved from Y 112.32 to Y 113.70. The US dollar moved from Y 84.343 as of Thursday to Y 84.28. The US dollar moved from CHF .9856 to CHF .9848. The UK pound moved from US $1.5683 to US $1.5833. The ICE Dollar Index moved the US dollar from 80.099 to 79.280.