Posted November 05, 2010
The US dollar falls during trading due to Fed move and ECB hold back. Euro gains considerably.
During the Thursday currency trading session, the euro managed to pull higher than the US dollar. The movement is likely to be a testing of the highest limit of the euro by investors. It pushed to its highest level against the US dollar since January. Investors are concerned that excessive dollar liquidity is likely after the Federal Reserve's recent announcement of quantitative easing measures to boost the struggling US dollar.
The euro is improving against the US dollar but this move has less to do with the economic or other conditions in the euro zone. Rather, the euro is rising because investors are pulling away from the US dollar which is likely to lose significantly value in the coming weeks as the stimulus program weighs heavily on the value of the currency. The market, some investors stated, did not expect the sheer size of the quantitative easing to be as large as the Fed announced it would be.
During the trading session, the euro moved from US $1.4132 as of late in the day trading in North America on Wednesday to US $1.4209 by the end of the day Thursday. During the day, it was as high as US $1.4282, which is a one percent gain for the day.
In addition to this, the European Central Bank also announced that it would not change its key lending rate. That helped to fuel the momentum for the euro. The central bank president, Jean Claude Trichet stated that the underlying recovery momentum in the euro zone remains positive and believes the inflationary pressures are under control.
The US Dollar Index moved the US dollar as well, to some of the lowest levels it has seen since December of 2009. During the trading day, the index positioned the US dollar down from 76.347 in late day trading on Wednesday to 75.905 by the end of the day on Thursday.
During the trading day, the Australian dollar claimed as high a US $1.0413 against the US dollar. This was mainly due to the lower value of the dollar which invaded the global markets rapidly.
Against the Japanese yen, the US dollar fell in value during the day, changing course from the previous day. The US dollar moved from Y 81.12 as of late Wednesday to Y 80.73 by the end of the day Thursday in North American trading.