Posted December 28, 2011
Investors play the risk and wait game throughout the week's session. While the US dollar continues to be the currency of choice due to the struggling euro zone, investors are willing to take some risk on positive US economic data. this helps to motivate sellers to push back into the euro, but by the end of the week, risk aversion remains a big factor. Light volume during the end of the week due to the Christmas holiday skewed some information.
The Monday trading session saw the US dollar improve during the day against most rival currencies. The euro did fall. This came after the European Central Bank's president made comments that were less than impressive. The European Union finance minister did not provide any good outlook for the euro zone that was considered aggressive enough. As a result, the US dollar index moved from 80.126 at the close of business on Friday in North America to 80.374 for the day on Monday. The euro moved to trade at US $1.3030 at the close of business on Friday and moved to trade at US $1.2997 by the end of the day on Monday. The Japanese yen moved from Y 77.82 at the close on Friday to Y 78.03 by the end of the day on Monday.
The Tuesday session brought with it some improvement for the euro. The US dollar fell during the session as investors were more encouraged by positive housing data out of the United States. This helped to bolster the numbers for stocks and commodities, which in turn pushed the currency markets towards more risk. Risk seemed like a good thing during the day's trading session. The US dollar index moved to trade at 79.871 by the end of the session. The euro moved to trade at US $ 1.3079 by the end of the day's trading. The US dollar bought Y 77.90 by the end of the day.
More risk aversion occurred during the Wednesday trading session as the euro took a step back from the increases it saw the previous day. The European Central Bank announced during the day that the first long term lending program brought with it strong demand from euro zone nations, indicating how much trouble numerous nations in the region are struggling under. The euro moved to trade at US $1.3198 for the day by the close in New York. The US dollar index moved to trade at 79.999 by the end of the trading session. The US dollar bought Y 78.10 by the end of the day.
The day's focus was on the euro which managed to hold near the psychological point of US $1.30 during the day. The US stocks improved and this pushed currency investors to take on a more positive outlook, taking on some of the risk in the market. The euro managed to move to US $ 1.3053 for the day. The US dollar index moved to trade at 79.929 by the end of the day. The US dollar bought Y 78.19 as well.
Risk gripped the market on Friday. The US dollar moved up after Italy's 10 year yields topped at seven percent. This made many investors worry that the country was in need of a financial bailout as well. However, there was some speculation that the markets were simply under volume due to the holidays. The US dollar index closed the week at 79.990. The euro moved to trade at US $1.3047. The US dollar bought Y 78.03.