Fear Over Debt Manages Markets

Posted November 22, 2011

European debt continues to plague markets. US banks may be at risk due to euro zone debt, putting fear into markets.



Monday, November 14th

The Monday trading session began with the Euro declining after the results of the Italian bond sale. The US dollar improved against the common currency when the sale of five-year bonds was the highest cost since 1997. Traders are concerned about the new government in the country and the challenges it is facing due to debt concerns. This pushed investors to move back to the US currency for its perceived strength. The euro moved from US $1.3745 at the end of the trading session in North America on Friday to US $1.3620 by the end of the Monday session. The US dollar index moved to trade at 77.532 which is up from the 76.947 point it was at on Friday. The US dollar moved from Y 77.17 on Friday to trade at Y 77.14 on Monday.

Tuesday, November 15

The US dollar has another up day at the euro falls on concerns over the borrowing costs associated with Italy, mostly from the result of a sale of Italian bonds yesterday. Costs are also up in Spain and other key members of the euro zone. This undercuts the investments investors are making and therefore pulls them away from the higher risk investments including the euro. As a result, the euro move to trade at US $1.3528 by the end of the North American trading session. The US dollar index pushed the currency further to 77.950 by the end of the session. The US dollar moved to trade at Y 77.08 for the day.

Wednesday, November 16

The Wednesday trading session saw the euro reverse its falling course only to fall below the US $1.35 mark. The fall in the value of the currency came after credit agency Fitch reported that the euro zone's debt crisis is having a negative effect on the US banking sector. Concerns over Greece, Portugal, Spain, Italy and Ireland remain a focus and investors sought higher and safer ground in the US dollar as a result. More so, the agency warned that unless steps were taking to work out euro zone concerns, the credit outlook for the US banks will fall. The euro moved to trade at US $1.3466 for the day. The US dollar index moved the currency to 78.261. The US dollar also moved to trade at Y 77.04.

Thursday, November 17

The Thursday trading session saw the US dollar pare losses as the euro did manage to trade under the key point of US $1.35. Investors remain concerned about the risk affecting the euro zone throughout the day. Spain's debt problems were the focal point of the session. This moved the euro to trade at US $1.3458 for the day. The US dollar index moved the dollar to trade at 78.298 for the day. The US dollar traded at Y 76.97 as well.

Friday, November 18th

The Friday trading session saw the US dollar fall slightly to the euro. The weaker dollar came as further reaction in the markets occurred as a result of European officials discussing a plan that would help to loan out money to the International Monetary Fund from the European Central Bank. The goal would be to help finance the various bailouts numerous euro zone countries continue to need. The euro managed to trade above US $1.36 during the day, but ended the day at US $1.3512 in North American trading.  The US dollar index moved the currency to trade at 78.098. Against the Japanese currency, the US dollar was little changed at Y 79.96, a slight change from the previous day.