Good Data Spurs Rise in Dollar

Posted October 01, 2010

Better US economic data moves investors towards dollar. Dollar gains for the day.


US Dollar

During the trading session on Thursday, the US dollar rose for the first time this week. This comes after better economic data out of the US was released. This pushed back concerns about the Federal Reserve needing to add more stimulus to the economy to get it moving again. The data, including the second quarter gross domestic product data showed improvements and showed that the economy was moving forward. In addition, weekly jobless claims were improving and Chicago area purchasing managers data all pointed to positive signs during the day.

However, while this data is promising, and many investors viewed what was thought of as the likelihood of Fed stimulus is now something they are questioning, it is important to note that next week’s government jobless data for the month of September will offer a bigger picture on the country’s economic movements.

Euro Zone

During overnight trading, the effects of Moody’s move to downgrade Spain’s Aa1 credit rating by one notch and the inclusion of a bill for the Anglo Irish Bank considered to be a bailout for the bank, pushed against the euro. However, the euro did not fall drastically as it would have done just a few months ago from this data. Investors seem less concerned about the euro zone’s financial problems, even with difficulties arising in Ireland, Portugal and Spain. Over the last three months, the euro moved from a four year low in June of US $1.19 up to 12 percent in the third quarter of the year. According to Reuter’s data, this is the best performance for a quarterly report since 2002. 

However, many investors believe that the euro is reaching its upper limits. It will be harder for the euro to gain as significantly moving forward, many believe.

By the Numbers

During the day’s trading, the following occurred. By late in the day trading in New York, the euro had moved from US $1.3630 to US $1.3632. The euro moved from Y 114.07 to Y 113.72. The US dollar moved from Y 83.70 to Y 83.44. The US dollar moved from CHF 0.9778 by the end of trading on Wednesday to CHF 0.9821. The UK pound traded at US $1.5787 on Wednesday and moved to US $1.5706 by end of the day Thursday. The ICE Dollar Index moved the US dollar from 78.759 to 78.762.