The US Dollar Exchange Rate continues to post gains for the 7th day

Foreign Exchange Outlook : The US Dollar Exchange Rate continues to post gains for the 7th day, with the euro exchange rate reaching a one-month low of 1.3220 overnight before Europe came in and engaged in a little profit-taking or perhaps less pessimism now that the German 50 billion stimulus plan is going forward. The consensus is firming that the ECB will cut rates by 50 bp on Thursday.

The Japanese Yen was stronger against everything.

Dollars to Japanese Yen fell yesterday from 90.33 at the open Sunday night to a low of 88.84 during the US session, and has gone sideways since then. The head of the Keidanren business association (who is also chairman of Canon) told the press that he thinks major countries should get together to intervene in the Foreign Exchange market to stop the rise of the Japanese yen.

He would like to see the Japanese Yen in a range of 5 yen on either side of 100. As we have noted before, Japan is suffering the biggest effects from the global downturn of all G7 or G20 countries - the biggest drop in GDP (12.1% in Q4) and the biggest drop in corporate sales and earnings. It's very strange for Japan to be the one country with a rising currency when everyone else is devaluing as fast as decently possible.

Pounds Sterling was hard hit by four bad data reports in single morning form the top reporting agencies (British Chambers of Commerce, Royal Surveyors, et al.) - housing, retail sales, a proxy for GDP, and trade deficit. The pounds to dollar exchange rate has straight lined from 1.5349 last Friday to 1.4536 so far today.

Bye For Now

Barbara Rockefeller
Foreign Exchange Trading
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