Posted November 20, 2010
US dollar falls as Ireland bailout brews. Euro improves significantly.
During the Thursday currency trading session, the US dollar fell significantly. After several days of gains, the euro was able to improve Thursday as investors pushed down the dollar. The US dollar had improved to the best levels it has been at since September in the days prior to Thursday’s session. Most of the currency movements had to do with European debt.
The US Dollar Index moved from 79.099 as of late Wednesday to 78.644 as of the end of the session on Thursday. The US dollar did move as high as 79.461 in the previous week.
Investors were moving towards the euro, even though Irish officials made a statement in which they noted that Ireland was likely to accept a European Union loan, also funded by the International Monetary Fund, to the tune of some tens of billions of euros. The move has not happened as of yet.
Investors were willing to take on more risk during the session, and the sale of bonds in Spain also worked to the favor of the euro. The euro moved from US $1.3521 as of late in the day trading in North America on Wednesday to US $1.3630 by the end of the session on Thursday. Investors had hoped for a deal to unfold, which is one of the main factors that pushed the euro back up during the session, from the US $1.35 level it was at earlier in the week. In addition, the euro is also benefiting from the increased financial pressures in the US that have the currency weakened.
The UK pound moved from US $1.5801 late in Wednesday trading to US $1.6042. This came in after the National Statistics in the UK said that the country’s retail sales were up 0.5 percent in the month of October.
The US dollar did manage to improve against the Japanese yen during the trading session. The US dollar moved from Y 83.30 as of late in the day Wednesday to Y 83.53 by the end of trading on Thursday. Currency traders had expected the Bank of Japan to intervene in the market, due to the request of the Ministry of Finance. The goal of doing so would be to stem the yen’s appreciation. This was largely discussed because of the lows against the US dollar in recent weeks, in some instances where the dollar had come close to the Y 80 mark.