The dollar experienced better than average increases recently due largely to the strong demand for US Treasury bonds as well as the speculation on reduction of rates made by European governments to mitigate the consequence of its serious economic downturn. The bright day for the US dollar was less so for the euro and the yen.
While the euro made out at 1.3522 dollars at 1900 GMT, rising to 1.3583 once the day’s trading ended on March 25. The dollar rose from 97.54 yen on Wednesday to 98.52 yen by the close of the markets.
Despite experiencing unexpected numbers according to a fourth quarter GDP report for the US economy, there was little to encourage the buying of the dollar on the currency trade markets. The data showed a decrease of total US economic output during the final quarter of 2008 to be about 6.3%, about 3% less than what was expected by analysts. There was some speculation that the poor turn out for buying due to the recent focus on global equities.
Others remained more optimistic. Kathy Lien of Global Forex Trading said the “currency traders shrugged off the underlying weakness because the GDP report is backward looking.”
Even as the GDP revision was largely ignored by many players in the foreign exchange markets, there were those who continued to keep a careful watch on the bond markets, due to the performance of the Treasury’s seven-year notes. Despite the poor conclusions of a previous auction on five-year notes, the most recent bond auction yielded surprising demands.
Relief was shared by a number of investors who were just happy to see a healthy demand. The total sales on Treasury bonds broke previous records by selling $24 billion in seven-year notes.
Tags: close, output, us treasury bonds, report, decrease, Foreign exchange market, Economy of the United States, Kathy Lien
Related posts:
About admin