US Dollar Falls After Backed Off View From Fed

Posted July 15, 2010

During the currency trading session on Wednesday, the US dollar fell. This after the Federal Reserve providing data that was not as promising for the US economy.


US Dollar Value Falls

During the trading session on Wednesday, all investor eyes were on the economic data streaming from the US Federal Reserve. The Federal Reserve’s message showed a darker economic picture for the country. This, along with previously announced data over the last week, nearly proves that the recovery is slowing in the country. In turn, the dollar tumbled during the trading session.

The Federal Reserve announced that there was a “relatively modest” worsening within the US economy apparent. Should the country’s economy note pick up on its own, the Fed states that there could be a need for more monetary stimulus. 

Analysts warned that the dollar could see further losses if the data out of the US continues to be less than what is expected. If this happens, it could show that there is a risk that the US recovery is going to be viable in the long term. It was clear from the day’s trading that the investors were not yet ready to turn to the US dollar and away from the riskier euro at this point. Investors are cautious, though.

Economic Data Creates Ripples In Market

The news affected investors around the world. Those currencies tied to the global growth movement, including the Australian dollar, did not fare well during the day. The Australian dollar moved slightly lower against the US dollar during the day. 

The euro was able to hold a slight gain against the US dollar. That came after the release of a less than ideal minutes of the Federal Open Market Committee. However, the euro was unable to hold on to the ten week highs it had been benefiting from in previous session thanks in part due to the improvement in US stocks. 

UK Pound

Also notable during the trading session was that the UK pound moved to a high not seen in two months against the US dollar. This happened after the UK unemployment numbers reported both showed the nation’s employment levels were improving.

By The Numbers

During the currency trading session for Wednesday, the US dollar moved from US $1.2721 as of late Tuesday to US $1.2735 as of Wednesday afternoon. The euro was able to hit its highest level earlier in the session, since early May. At that point, it moved to US $1.2778, closer to the psychological level of US $1.30 many investors are hoping for. This high note occurred while US stocks improved right out of the gate because US corporate earnings reports were stronger than expected. The Fed minutes stopped the euro from holding on to these gains, though.

The euro moved from Y 112.64 to Y 112.29. The US dollar moved from Y 88.58 to Y 88.19. The US dollar moved from CHF 1.0544 to CHF 1.0540. The UK pound moved from US $1.5173 to US $1.5261. The ICE Dollar Index moved the US dollar from 83.538 as of Tuesday evening to 83.385.