US Dollar Has Rough Week

Posted March 23, 2011

Oil prices focus of weekly trading. US dollar struggles throughout week.



Numerous factors affected the US dollar and other currencies in the last week. Notably, the unrest in Libya and the entire region, soaring gas prices and economic information continue to be the biggest role players in the market movements.
Currency Week Start Off
On February 28th, the dollar started the week off hitting a four month low against rival currencies. The currency fell back against the US dollar mainly due to the traders pushing the euro up just ahead of the European Central Bank meeting to occur later in the week. The US dollar index started the week of at 76.909 at the end of the trading day on Monday in North American trading. In the month of February, the US dollar fell overall by 1.1 percent for the month. From the beginning of the year, the US dollar fell a total of 2.7 percent at the close of the month.
The euro started the week up in late day trading in North America. It closed the Monday trading session at US $1.3804, up from the US $1.3750 it was at the previous Friday. In addition, the euro moved up against the Japanese yen to trade at Y 112.86. This is a 0.5 percent increase for the currency. The UK pound improved against the US dollar during the Monday trading session. It moved to US $1.6265, or up 1.4 percent for the day. The US dollar rose against the Japanese yen during trading. it moved to Y 81.78 for the day on Monday.
Tuesday Session
The US dollar rallied on Tuesday, finding support for those currency traders moving away from the euro and most other rivals as they focused on stocks. The stock market fell significantly for the day, leading investors to move away from the risk of other currencies. Also affecting the currency for the day was the Treasury prices that turned higher during the session and the yields that fell. Oil prices also rose during the trading day, putting fear into the markets. Oil prices rose to new levels not experienced in two years.
During the Wednesday trading session, the US dollar fell against the euro, mainly due to the increasing oil prices. During the day, the oil prices rose to $101 for the day per barrel. This pushed the traders away from the US dollar due to the increased risk for inflation due to rising costs.
During the Thursday currency trading session, the US dollar fell sharply lower against many of its rival currencies. This came specifically after the European Central Bank meeting announcement in which it became evident that the policy makers for the ECB would likely raise the interest rate in the next month for financial institutions.
Friday Roundup
By the end of the week, the US dollar moved to the lowest level it has been at in four months against the euro. The US dollar also gave up many of its gains from the week against the Japanese yen. Oil still remains the focus on the trading session, with the cost of a barrel rising to $104 during the Friday trading session. Investors are worried that the increase in energy costs caused by the increase in oil will push on the fragile economy and hurt the growth potential present.
By the end of the trading day, the US Dollar Index positioned the US dollar at 76.385 for the day, though it did fall to 76.275 during the trading session. The euro moved to the highest level against the US dollar it has seen since November. It moved to US $1.3991 at the end of the day. The yen moved to Y 82.31 and the UK pound moved to US $1.6266 by the end of the week.