Worries Allow Yen and US Dollar to Increase

Posted May 15, 2010

During currency trading on Friday, the euro and other currencies that are considered risky fell back. The dollar and yen did well.


Worries Spark Retreat

During Friday’s currency trading session, the nervous and sometimes scared look of traders intensified. Although no new developments within the debt crisis and economic strains that many euro zone countries are facing were presented, the mood of investors was a retreat from risk. In short, all risk oriented currencies were left with investors during to the US dollar and yen as a safer bet. Both currencies had a very good day.


During Friday’s currency trading, the euro took yet another plunge. This time, it fell to lows not seen since October of 2008 before improving slightly. Also notable was that the equities and commodities markets fell sharply for the day. This too was an indication that the markets simply wanted to retreat to safety.

By the Numbers

During the day’s trading, the euro fell to US $1.2358. That is the lowest point it has hit since October of 2008. It did increase off this level, but London traders squared up their positions heading into the weekend. The rebound for the euro still left the euro down 1.3 percent for the day when compared to the US dollar. Still, it lost against the yen even more so, falling by 1.7 percent for the day. When you look at the long term picture, the euro has fallen 13.5 percent since the start of 2010.

By the end of the day Friday, the numbers showed the risk. The euro moved from US $1.2531 as of late Thursday’s trading to US $1.2372. The euro also fell from Y 116.13 to Y 114.33 for the day. The US dollar moved from Y 92.68 to Y 92.35. The US dollar moved from CHF 1.1178 to CHF 1.1318. The UK pound moved from US $ 1.4614 to US $1.4537 for the day.

Against the ICE Dollar Index, the basket of currencies moved up to 86.201 from 84.848. That is the highest level the index has placed the US dollar since April of 2009.

Canadian and Australian Dollar

The Canadian dollar is seen as more risky for investors than the US dollars. As the world retreated in the currency market for the day, the Canadian dollar took a hit as well. Further complicating things was the weaker value of oil prices.

Against the US dollar, the Canadian dollar moved from C $1.0197 to C $1.0317.  The Australian dollar moved from US $0.8962 as of Thursday’s trading to US $0.8855 by the end of trading on Friday.

US Dollar

Although the US dollar did see an improvement on the day, the move was less about the good US data out about the country’s economy and more about risk tolerance. Most people are currently focusing on the debt crisis in Europe and what this means to the recovery of the global economy. Many investors believe that risk will play a role in the weeks ahead as well.