Posted October 07, 2010
The US dollar fell to six month lows against the euro. Japanese officials cut rates.
During the Tuesday currency trading session, the US dollar fell to lows it has not been at in six months against the euro. It also fell even more so against the Japanese yen, especially after the Japanese bank cut key lending rates unexpectedly. In addition, the country unveiled a new asset buying fund.
The move by the Japanese officials to cut rates may be an indication that the Federal Reserve may be more inclined to ease US monetary policy, some investors believed. The euro, on the flip side, was likely to continue to see a boost as the European Central Bank worked to move away from its more accommodative policies. Investors want the euro.
The ICE Dollar Index positioned the US dollar at 77.749 by the end of trading in New York. IT was at 78.442 as of late Monday. This is the lowest level it has been at since the month of January. The US dollar did see a slight improvement during the day's trading as the Institute for Supply Management reported that the US nonmanufacturing sector's index has improved to 53.2 percent in the month of September and 51.5 percent in August. This is higher than most analysts had predicted.
The Japanese yen continued to take hold of the US dollar. The US dollar moved from Y 83.40 as of late trading in New York on Monday to Y 83.20 by the end of trading on Tuesday. After the Japanese bank announced its rate cut, the US dollar did improve slightly but it did not make it through the Y 84.00 mark.
The euro managed to improve during the day's trading as well. It moved from US $1.3686 as of late Monday night to US $1.3852 by the end of trading Tuesday. During the trading day, the euro managed to hit US $1.3859, which is the highest level the currency has been at in more than six months. The euro took advantage of the positive data out of the European and British manufacturing industries, which was reported during the trading session.
The UK pound also moved up during the day against the US dollar. It moved from US $1.5828 as of Monday's trading session to US $1.5908 by the end of the day. An unexpected rise if the UK services purchasing managers index for the month of September helped to boost the UK pound.