Posted October 23, 2010
The US dollar rises as investors pare risk. G-20 meeting holds investors back.
The US dollar gained during the Thursday trading session against most of its rival currencies. Investors focused on the Group of 20 meeting and pushed away from risk. The US dollar’s perceived strength lured in investors.
The increase in the US dollar was opposite of the movement’s the day before. The positive data out of both Germany and China encouraged investors to move towards the riskier assets during overnight trading. However, the mood towards risk changed during the New York trading session.
Much of the concern centered around the possible emerging currency agreement that may occur during the G-20 meeting occurring in South Korea next weekend. Most analysts believe that while there may be discussion about this agreement, it is unlikely that any real accord will occur. All of this made for a volatile session for the dollar throughout the week.
Also playing a role in the markets was the economic data received. In overnight trading, new economic data showed that there is growth outside of the United States. That information pushed investors higher on other currencies and away from the US dollar during the overnight trading session.
Out of China, reports that indicated that the gross domestic product for the country slowed to 9.6 percent after reaching 10.3 percent in the second quarter, were issued. The third quarter reports were higher than what many analysts predicted at 9.5 percent. In addition, Japanese data was not as positive. This helped to push investors towards riskier assets. Reports indicated that the Japanese stockpile of rare earth minerals may not last past April without the receipt of new minerals from China. China, though, has stopped exporting these minerals. That could cause a significant slowdown in the country’s economy.
By the Numbers
By the end of the trading session on Thursday, the euro had moved from US $1.3949 as of the end of Wednesday trading in New York to US $1.3922. The euro moved from Y 113.25 to Y 113.22. The US dollar moved from Y 81.16 to Y 81.35. The US dollar moved from CHF 0.9627 to CHF 0.9679. The UK pound moved from US $1.5840 as of Wednesday to US $1.5706. The ICE Dollar Index moved the US dollar from 77.212 to 77.453 by the end of trading on Thursday.