Posted November 10, 2010
US dollar up but investors worry about euro zone debt. Bond sales worry investors.
During the currency trading session on Tuesday, the US dollar improved against both the UK pound and the euro, as investors watched debt sales in concern over every increasing debt problems in Portugal and Ireland. The US dollar improved significantly midday as investors watched Portugal try to finance itself and falling equities pushed investors away from riskier assets.
During the trading session, the US dollar managed to improve against the euro for the second day in a row. The Dollar Index moved the US dollar's value from 76.979 as of late in the day on Monday to 77.477 by the end of trading in North American trading on Tuesday.
One of the factors pushing the investors to lower risk currencies like the US dollar was the drop in US equities. The S&P 500 Index, for example, was down by .04 percent during the trading session. Many investors believe that US stocks are likely to see a significant reversal in the coming days or weeks. Investors are concerned that this could cause a correction in the euro towards US $1.35 depending on how large the change in the stock market is.
Nevertheless, all eyes are focusing on euro zone debt.
The euro was down against the US dollar, falling from US $1.3924 in late day trading on Monday to US $1.3830 by the end of the trading day on Tuesday. During the day, it rose as high as US $1.3974 during the European trading session. This occurred after the Greek bill auction occurring during the session was successful.
The cost of insuring the debt in Portugal is one of the main concerns investors have currently. Portugal will have an auction of its debt on Wednesday. Reports indicate that some Euro 1.25 billion in bonds will be sold during the Wednesday session. If all goes poorly, this could push the euro down significantly during the day's trading session.
Against the UK pound, the US dollar also improved. The UK pound moved from US $1.6136 as of late in the day trading on Monday to US $1.6040 by the end of trading on Tuesday.
The Japanese yen also moved against the dollar. It moved from Y 81.19 as of late in the day in trading on Monday to Y 81.67 by the end of the session in New York.