US Dollar Gains On US Economic Data

Posted January 06, 2011

US dollar continues to gain. Economic improvement keeps it strong.


US Dollar

During the Wednesday currency trading session, the US dollar improved on the day. It improved to advance a full one percent against the euro during the day’s trading and moved ahead against the yen as well. All of this stems from the positive growth in the US economic evident by recent reports, including the strong improvement in hiring in the private sector in December. The country’s economic outlook looks positive and that has spurred investors to the US dollar.

However, some of the experts in the market are warning that the gains in the US dollar could be fragile, especially as the US employment report is due out on Friday which provides a better picture of the actual economic conditions. Data shows that the private sector improved payrolls by as much as 297,000 people in the month of December. Most economists predicted only an improvement of 100,000 in this industry. The reports, out by ADP, a large payroll company in the United States, have not been reliable in the past, though.

For the day, the US dollar index moved the US dollar from 79.433 as of the end of trading on Tuesday in North American trading to 80.246 by the end of the Wednesday session.

The Euro

The euro lost to the US dollar. It moved from US $1.3305 as of the end of trading on Tuesday to US $1.3153 by the end of the Wednesday session.

There continues to be worries throughout the euro zone. This continues to hold back the euro. The euro continues to be weak. One of the reasons for this is the recent report that the Swiss National Bank has excluded the purchase of Irish government bonds for the use of collateral for its repo operations. The bank stated, in indirect terms, that the Irish government bonds did not meet its criteria for a strong credit rating and liquidity as required to be considered collateral. In addition to this, Portugal sold some 500 million euro’s worth of six month bills during the days trading session, at a yield of 2.686 percent on average.


The US dollar also improved on the Japanese yen, which it did not do in the previous day’s trading. The US dollar moved from Y 82.00 as of the end of business on Tuesday to Y 83.26 at the end of trading on Wednesday.