Volatile day ends with euro up

The euro strengthened by 0.59 cents (0.42%) against the dollar yesterday to finish the day at $1.3986.

• In a choppy day’s trading yesterday the euro first weakened then strengthened against the dollar, as investors digested Wednesday’s major announcements.
  
• The European Central Bank’s 442 billion euro injection of one-year funds into money markets on Wednesday received a mixed reaction yesterday, after a record 1,121 banks took up their offer.
  
• Similarly, the US Fed’s decision to leave interest rates on hold and not extend their quantitative easing program produced equal uncertainty in the market. Some took their decision to ‘wait-and-see’ as a positive sign the recession was easing, whereas others were disappointed that the bank effectively ruled out interest rate rises for the rest of this year.
  
• These differing viewpoints resulted in a volatile day’s trading, with both currencies swinging into positive and negative territory. The dollar’s cause was helped mid-afternoon, however, after worse-than-forecast US jobless data reduced investor’s appetite for risk. Nevertheless, the euro finished the day slightly up.
  
• In trading so far today the euro has once again broken through the $1.40 barrier, as investors continue to pick over this week’s economic announcements.
  
• There are no major announcements due in the US or eurozone today.