US Dollar Loses Some Gains

Posted November 12, 2010

US dollar falls from one month highs. G20 meeting starts.


US Dollar

The US dollar continued to rise during the trading session on Wednesday to the highest level it has been at against the euro since early in October. This stems from the better data out of the United States as well as additional information out of the euro zone. 

The US dollar was also benefited by the continued troubling news out of the euro zone in regards to Portugal’s debt. The bond auction held to help the country was weak. In addition to this, the rising rates in China also helped to push investors towards the US currency over the euro and others.

However, during the trading session, the US dollar lost some of its gains as the stocks lost their gains. In addition, the Treasury completed its final bond sale for this week. The US Dollar Index showed that the US dollar moved from 76.979 as of late Tuesday to 77.621 by the end of trading in North America on Wednesday. During intraday trading, the index positioned the US dollar at 78.172, which is the highest level it has been at since October. 

UK Pound

Against the UK pound, the US dollar feel throughout the day. This comes after officials stated that they expect inflammation to be strong enough within the country to stop them from using more monetary easing measures to further boost the country. This information encouraged investors as there seemed to be no need for the UK to take measures such as those the Federal Reserve in the US took to adjust monetary policy. 


The euro moved from US $1.3830 as of late day trading in New York on Tuesday to US $1.3787 by the end of trading on Wednesday. During the day, it reached as low as US $1.3669. That is the lowest the currency has been at since early in October.


The US dollar improved against the Japanese yen during the trading session. It moved from Y 81.67 to Y 82.23 by the end of the session. 


Also notable was that China raised its reserve ration for banks. This is another increase for the rate. The country is working to slow down the growth of the economy. In addition, China also announced that its trade surplus rose significantly in the mouth of October. This will likely lead to further speculation that it is deriving an unfair trade advance and that it has an undervalued currency.