Posted December 31, 2010
US dollar down. Improved economic picture pushes investors to risk.
During the Thursday currency trading session, positive economic data helped to encourage investors to turn towards other currencies, and away from the US dollar. With the currency markets closed on Friday for the New Year’s holiday, and all trading during the week being lighter as a result of the holidays, the euro will remain down for the year.
The US dollar was done during the Thursday trading session against most of its rivals. This came in by the positive US economic data and a recent retrenchment in the benchmark bond yields.
For the day, the US dollar index showed the currency moving from US $1.3219 at the end of the Wednesday trading session in North America to US $1.3290 by the end of the Thursday session.
Investors believe that the US dollar will continue to remain weaken, especially as more favorable economic climates in the global economy emerge. This encourages investors to move towards the more risky currencies including the euro and away from the perceived safety of the US dollar. Out of the US, a US weekly jobless report showed the lowest levels of people claiming benefits since July of 2008. Initial jobless claims well 34,000 for the week. In addition, pending US home sales were up 3.5 percent in the month of November, that shows significant improvements over last year.
During the Thursday trading session, the US dollar fell against the Swiss franc. The franc was trading at record highs against the euro and the US dollar. This is exaggerated, many experts say, by the reduced amount of trading for the session.
The UK pound also saw the US dollar fall against it during the session. This comes after euro zone debt concerns and the US yields have boosted the value of the franc and dropped the value of the other currencies in the region.
The Japanese yen continued its trends. The sensitivity to the US yields pushed the Japanese yen and dollar mix to the lowest level it has been at since 1995, during the November trading sessions. That was after the Bank of Japan intervened in the market to slow the ever increasing value of the yen.
Against the Australian dollar, the US dollar has lost almost 12 percent for the year. It has lowest almost 6.2 percent against the New Zealand dollar as well. Against the Canadian dollar, also a commodity based currency, the US dollar has fallen 4.5 percent for the year.