US Dollar Pares Gains

Posted January 04, 2011

The US dollar pared its gains Monday. Investors look at risk carefully.


US Dollar

During the Monday currency trading session, the US dollar pared its gains, as movements in the US stock and bond market was impressive on Monday. A report out of the Institute of Supply Management showed that US manufacturing data was improved in the month of December. Also playing a role in the session was the US Treasury yields which gave back some of the earlier in the session improvements. 

As a result, the US dollar index moved the US dollar from 79.02 in Friday trading in Europe to 79.152 by the end of the Monday trading session. During the day, it rose as high as 79.527. In the last session for 2010, the US dollar index posted a 1.5 percent improvement for the year. 


During the Monday session, the euro moved up from US 41.3369 as of the end of trading in Europe on Friday to US $1.3363 by the end of the day on Monday. By the end of trading in the 2010 year, the euro lost a total of 6.5 percent against the US dollar. 

The Monday session was marked by investors starting the year off by moving money out of the less risky investments and into more risky options. The stock market showed this as well, with investors causing big gains for the day. The US dollar is considered a safer option in financially critical times. By the late afternoon, the S&P 500 Index had gained 1.1 percent for the day. 

Investors are still concerned about the sovereign debt problems in the euro zone, though. This week there is to be several debt auctions in the euro zone which could play a role in the effectiveness of the confidence of investors during the Monday session. Traders are likely to focus in on these auctions to determine the state of fiscal problems for companies. 

During the year, more than $80 billion in bank notes and sovereign debt notes will be sold during the trading sessions this year, some experts report. On Monday alone, some 8.523 billion euros in bills were sold by France. 


The Japanese yen moved from Y 81.24 to Y 81.71 during the trading session. 

The UK and Japanese markets remained closed on Monday due to the New Year’s holiday. That reduced the volume within the market considerably during the trading day, but still allowed for some global markets to see changes.