Growth Concerns Cause Dollar To Fall

Posted July 17, 2010

The Thursday trading session saw the US dollar fall significantly. The fall was to seven month lows.


The euro moved above the psychological level of US $1.30 during the currency trading session on Friday. This level, not seen in months, is one that investors had hoped the currency would move closer to. During the trading day, investors were less concerned above the euro zone debt crisis, and more concerned with the worry that global growth was slowing. Successful auctions this week for Portugal and Spain government debt also added fuel to the euro improvement.

US Data

Out of the United States came further concern about the ability of the country to pull out of the recession. The data on Friday showed that consumer sentiment is not where experts had hoped it would be. The fear that the economy has slowed in growth also had investors highly concerned that the country might be moving towards a double dip recession, where  recent recession improvements would be hurt by another significant recessionary downturn. Global recovery, some experts believe, hinges on the improvement of the US economy, as well as others around the world.

Australian and Canadian Dollars Unwind

The concern that a double dip recession would take place caused investors to unwind many of their bets on the higher yielding currencies. This includes the Australian dollar. These yields had been funded with the lower costing US dollar and the Japanese yen. During the trading session on Friday, the Canadian and Australian dollars fell by more than 1.4 percent against the US dollar. 

By The Numbers

The most important news of the day was that the euro managed to rise to highs not seen in two months, when it reached the US $1.30 level during the day. By late in the day Friday, the euro had moved to US $1.2927 which is an improvement from the US $1.2900 it was at Thursday evening. The euro rose as high as US $1.3008 during the trading day. The loss in the gains from the euro occurred after the US stock market began to fall. The US stock market ended the day down in negative territory, by as much as 2.6 percent. The euro managed to gain 2.5 percent during the week’s trading against the US dollar. It has shown improvement since it hit its lowest point in early June.

The euro moved from Y 112.81  on Thursday to Y 111.95 on Friday. The US dollar moved from Y 87.46 to Y 86.61. The US dollar moved from CHF 1.0439 to CHF 1.0519. The UK pound moved from US $1.5412 to US $1.5298 during the day. The ICE Dollar Index moved the US dollar from 82.555 as of late Thursday to 82.535.

The US dollar fell to Y 86.27 during the day’s trading session. This is a point not seen in the last seven months. The drop occurred as US economic data on consumer sentiment took a nosedive. The report out about the consumer sentiment levels showed that numbers in mid July not seen since March of 2009.