Following comments by the Chairman of the Eurogroup regarding the rise of the Euro traders speculated that some action may be taken to curb the rise and as a result, the Euro gained against the U.S. Dollar in overnight trading. However, in early morning trading in Sydney, the U.S. Dollar was mixed.
On April 18, 2008, at 10:25 am (00:25 GMT), the U.S. Dollar traded at 102.44 Yen as compared to 102.55 Yen, while the Euro traded at $1.5898 compared to $1.5910 in late New York trading on Thursday, April 17, 2008.
While the G7 warned of dangers of market fluctuations, they appear reluctant, for now, to intervene to stem the rise of the Euro.
Data released on the U.S. regional manufacturing, which was weaker than expected, helped push the Euro to $1.5945 before retreating and closing at $1.5910. According to the Philadelphia Branch of the Federal Reserve Bank, the area’s index of manufacturing activity dropped to -24.9 in April, which was lower than what the economists had predicted and the lowest ever recorded since 2001 recession. According to some analysts, traders believe that the liquidity crisis may be coming to an end.
The Yen appears to come under pressure as traders have started unwinding safe haven strategies.