Posted August 31, 2010
The US dollar fell on Tuesday as investors considered growth risks, against the yen. The dollar also improved against the Swiss franc.
During the currency trading session on Tuesday, the US dollar fell against both the yen and the Swiss franc. Investors are still concerned over the slowdown of the US recovery and took to the safer investments.
US Economic Data
Investors are still concerned about the pace of the US economic recovery and as such reacted to the Federal Reserve’s rate setting meeting committee minutes in such a tone. Investors did not react too negatively after the minutes were released, but at the same time, it became clearer to investors that the slow down in the United States seems to be a reality. Investors are anxious to learn how the Federal Reserve plans to offer some type of kick start to the economy, which has held back the dollar during trading. The meeting minutes did not offer anything significantly worrisome, but it did show that the Fed has put a hold on increasing rates due to the shrinking of the massive balance sheet.
It is likely that investors will continue to watch and wait for more economic data to come out of the US before making any significant moves. Specifically, Friday’s nonfarm payroll report is due out, which could give investors an indication of which way the markets are moving.
The euro also struggled to gain against other currencies. It did manage to improve in small amounts against the UK pound and the US dollar. This came off of information out of Germany indicating that the German labor market has improved somewhat less than what economists had hoped for. However, the same report indicated there was an increasing demand for workers present.
However, during the currency market movements, the euro did fall to an all time low against the Swiss franc. It moved to a low point of CHF 1.2860 during the trading day, marking the first time the currency has fallen below the CHF 1.29 mark during European trading.
The yen’s movements continue to be on the minds of investors. Some believe that the Bank of Japan’s monetary easing steps are not providing enough of an aggressive move to slow the currencies growth. The Bank of Japan did say on Monday that it would lend another Y 10 trillion in six month funds at a fix rate in order to help the currency to slow its growth.
By The Numbers
By late in the day Tuesday, the euro had moved from US $1.2663 as of Monday to US $1.2673 for the day. The euro moved from Y 107.09 to Y 106.25. The US dollar moved from Y 84.55 on Monday to Y 83.83 by the close of business on Tuesday in New York. The US dollar moved from CHF 1.0261 to CHF 1.0147 on Tuesday. It did fall as low as CHF 1.0136 during the trading day. The UK pound moved from US $1.5459 to US $1.5346 for the day. The ICE Dollar Index moved the US dollar from 83.160 to 83.104.