US Moves Farther Ahead on ECB Comments

Posted February 04, 2011

The US dollar improved on the day after comments from ECB. Investors seek security


US Dollar

During the Thursday trading session, the euro fell by as much as 1.2 percent during the day against the US dollar and the fell against the Japanese yen as well. The US dollar index showed the US dollar moved from 77.127 at the end of the trading session on Wednesday in North American trading to 77.755 by the end of the trading day on Thursday.

A variety of factors helped to boost the value of the US dollar, including a Labor Department report that indicates that first time jobless claims fell in the latest week by a number higher than what most economists expected it would.  Also, the Insitute for Supply Management released an index report that showed that the US service sector improved for the month.


Most of the movement in the euro during the Thursday trading session stemmed from comments made by European Central Bank President Jean Claude Trichet. He stated that he was less worried about inflation risks than what most of the currency traders and experts had expected. This made many currency traders believe that the ECB is working towards an interest rate hike at some point this year, but it not at the pace that most investors would like to see occur. 

The euro moved from US $1.3805 at the end of the North American trading session on Wednesday to US $1.3636 by the end of the trading day on Thursday. During the trading day, the euro fell as low as US $1.3615.  This allowed the euro to lose 1.1 percent against the Japanese yen for the day and 0.9 percent against the UK pound as well. 

After the central bank left the key lending rate unchanged and at the record low mark of one percent, many of the foreign exchange traders pushed the euro farther down during the day. Many had anticipated that the bank would increase the key lending rate at this meeting. However, many expected Trichet to continue with the anti-inflation dialogue, as he did. 


Against the Japanese yen, the US dollar moved from Y 81.58 at the end of the Wednesday currency trading session in North America to Y 81.64 by the end of the Thursday trading day.

UK Pound

The UK pound managed to improve during the trading day moving higher than US $1.62 during the trading session. This came after comments that indicated the UK service sector had rebounded for the month of January.