Posted August 28, 2010
The Fed's remarks push dollar higher. The dollar improves against yen.
During the Friday currency trading session, the US dollar improved against the yen and improved against the Swiss franc. The movements within the market were mainly focused on what Federal Reserve Chairman Ben Bernanke had to say during a scheduled, annual speech.
The US dollar improved against the franc and the yen, but held strong against the euro during the currency session. Bernanke's comments that the Federal Reserve would implement more stimulus into the US economy if it was needed seemed to help give investors a boost when turning to the currency investments.
The speech was made at an annual meeting of top central bankers. At the meeting, the Fed chairman stated that the Fed is ready and able to support the US economy, including offering support for the faltering recovery. However, the chairman did not say how or when he would act to implement such measures. He said that officials had yet to determine what terms would trigger a new stimulus measure to be put into place. Bernanke did state he expects the US economy to grow throughout 2011 and years to follow.
The markets turned to a more optimistic look after the meeting. This was partially because the meeting did not offer any worrisome signs that could trigger investors to move more conservatively. The mood of the market continues to be optimistic but cautious nevertheless. In the week ended Tuesday, many investors had increased the bets taken against the euro. Shorts, which are also known as net speculative bets, in place against the euro increased, moving to $3.6 billion as compared to the week before when the value was $2.3 billion. However, investors still feel that the euro remains a balanced level, especially compared to the bets from earlier in the year.
High Yielding Currencies
With the information from the Federal Reserve, the demand for higher risk assets seemed strong. This helped to push the New Zealand dollar and the Australian dollars higher. During the trading session, these currencies gained 1.4 percent on the day against the US dollar.
The euro also looked favorable to investors. It is also a higher risk currency. The euro managed to improve from the earlier in the day slide.
The US dollar gained against the yen during the trading day. This came even after the release of information showing better than expected numbers in the area of US gross domestic product. It moved higher more than expected in April to June.
By the Numbers
By the end of the trading session on Friday, the euro moved from US $1.2724 to US $1.2734. The euro moved from Y 107.40 to Y 108.72. The US dollar moved from CHF 1.0239 to CHF 1.0293. The UK pound moved from US $1.5530 to US $1.5513 by the end of the trading day on Friday. The ICE Dollar Index moved the US dollar from 82.841 as of Thursday evening to 82.875 by the close of business Friday.