Posted July 14, 2010
During the currency session on Tuesday, the US dollar fell against the euro. The euro improved as investors moved towards risk.
On Tuesday, investors were ready to take on more risk for the session which helped to improve the euro’s value. The US dollar’s value fell mainly due to reports out from the US showing that the US earnings season for the second quarter was strong. Further, Greece’s treasury bill sale also offered good news which helped to show the strength of the euro zone’s financial markets.
US Data And Reports
During the Tuesday currency session, US stocks jumped significant. They closed higher for the sixth day in a row. This helped to fuel the sentiment in the currency markets as well. All was due to the strong earnings data that was released. It showed that the global business markets are on a path of strengthening, even though recent data reports showed some weakness. These reports helped to push investors into the euro, the New Zealand dollar and the UK pound and it spurred the stock markets to rise. Risk sensitive currencies were able to improve during the session.
Investors are likely to be paying close attention during the Wednesday session when US retail sales for the month of June will be released. Also, investors hope to learn anything about the Federal Reserve’s plans to increase the key lending rate.
Euro Debt Sale
Also important for the currency trading session was the positive results from the sale of some Euro 1.625 billion in treasury bills from Greece. The fact that there was such positive sentiment and a willingness to sell helps to show investors that the euro zone debt is improving or at least is not hurting the financial sector there. Some investors are moving away from concern of euro debt problems, feeling more confident that these are now under control.
Dollar Unable to Advance Against Yen
Although the news about the global growth was positive for the day and the debt crisis seems to be fading, investors were still somewhat cautious. This is evident in the fact that the US dollar could not improve against the Japanese yen. Experts say that the inability to overcome the yen’s value is a sign that there is some skepticism in the markets about the US stock market’s recent rally.
By the Numbers
By late on Tuesday, the currency markets did have favorable movements for various currencies. The euro moved from US $1.2593 as of late Monday to US $1.2721. The euro was able to reach a high of US $1.2739 during the early portion of the session, but was unable to hold on to these gains throughout the session. The euro moved from Y 111.55 to Y 112.64. The US dollar moved from Y 88.59 to Y 88.58, a very small change for the day. The US dollar moved from CHF 1.0601 to CHF 1.0544. The UK pound moved from US $1.5030 to US $1.5173 for the day. The ICE Dollar Index moved the US dollar from 84.228 as of late Monday to 83.538 against a basket of currencies.