Posted October 27, 2010
US dollar falls after the weekend G-20 meeting. Investors turn to Fed Reserve likely movements.
Perhaps the most important part of the currency market during the Monday session was the G-20 meeting that happened over the weekend. The US dollar fell significantly during the session as a statement from that meeting indicated that the included nations would pave the way for investors to keep their focus on the movements of the Federal Reserve, which is likely to use quantitative easing to help bolster the fledging US economy.
In an agreement at the meeting, the group agreed to avoid a competitive devaluation of currency. This helped to reduce some of the fears of investors that some governments would be aggressive in their push of their currencies to lower those currency’s values against the US dollar. Investors then were able to focus on global growth as they made currency decisions for the day’s trading.
During the trading session, the US dollar once again hit fresh 15 year lows against the Japanese yen. The US dollar fell as low as Y 80.41 during the overnight trading session. A few weeks ago this would have led to investors being concerned about intervention in the market. However, the new agreement with the G-20 meetings crafted over the weekend makes this more difficult. However, not all investors are convinced that the Japanese officials will stay out of the yen’s continuously improving value.
Also notable was that the Australian dollar increased significantly during the trading session. It rose 1.4 percent in overnight trading. The Australian dollar is closely tied to global growth economics.
The US dollar was able to reduce some of its losses against its major currency rivals during the New York trading session after positive data about the United States housing market was released. That helped to stop the negative flow.
By The Numbers
By the end of the currency trading session on Monday, in New York, the euro had moved from US $1.3923 as of late Friday to US $1.3969. The euro moved from Y 113.46 to Y 112.86 for the day. The US dollar moved from Y 81.41 to Y 80.79. The US dollar moved from CHF 0.9787 to CHF 0.9708 for the day. The UK pound moved from US $1.5667 to US $1.5732 for the day. The ICE Dollar Index moved the US dollar from 77.494 to 77.145.