Posted November 23, 2010
The US dollar improved due to concerns over European debt. Investors move away from risk.
During the currency trading session on Monday, the US dollar continued to climb. Investors pushed away from the euro during the trading session as Moody’s Credit Rating noted that there could be multi notch downgrades in Europe due to the debt concerns there.
During the trading session, Ireland debt was the main focus in the markets. It is likely that the currency could further improve as investors pull away from the associated risk of these debt concerns. The downgrading of the creditworthiness of Ireland’s debt could also mean that the problem is larger and wider than what many investors had hoped.
The US dollar index moved the US dollar from 78.474 as of late Friday in North American trading to 78.611 by the end of trading on Monday.
The euro moved from US $1.3678 to US $1.369 by the end of trading on Monday in North American trading. The euro was able to jump up to US $1.3790 in the European trading market, but it was unable to hold on to any of the gains. At the start of the session in Europe, investors did move favorably towards the euro after Ireland came to an agreement with the International Monetary Fund and the European Union to find a way through its debt crisis. The deal could give the country some 80 billion to 90 bill euros to help address the country’s particular debt concerns in its financial district.
Perhaps most harmful to the euro during the Monday trading session was the fact that Moody’s Investors Service, which monitors the creditworthiness of various country’s financial systems, announced that it was doing a weekly credit outlook on the country that could result in a multi notch downgrade. The country’s credit rating from the agency is currently set at AA2, but the review may cause this to fall significantly, which is likely to be worsened even more so with the bailout plan in place.
In other trading, the UK pound managed to fall 0.2 percent against the US dollar. This moved it down to US $1.5956 during the trading day.
The US dollar did fall against the Japanese yen during the trading session. It moved from Y 83.48 as of Friday to Y 83.26 by the end of trading on Monday.
Also notable was the fact that the Australian dollar inched up against the US dollar. It moved as high as 99 cents but closed out the session at 98.73 US cents.