The US dollar exchange rate was moving sedately upward until late in the day yesterday, when a sudden rally in US stocks surprised the Foreign Exchange market. Foreign Exchange Traders rushed to sell the yen against everything and to buy emerging market currencies (including the Mexican peso), putting the US dollar rate on the defensive. The dollar/yen rose to a new high of 91.77. The new rule - Foreign Exchange traders need to follow equities - was proven. Overnight in Asia, the euro to us dollars was all but forgotten as attention and activity focused on euro to japanese yen, which whipped from 116.95 at the US close last night to a high of 118.54.
Euro to us dollar exchange rate is trading in a narrow congestion band of 1.2860 - the New York close last night - to 1.2943, the overnight high and 1.2853, the overnight low. This is under 100 points and may not mean anything. The euro exchange rate might have moved more but economic releases were just awful - eurozone GDP falling more than forecast. See below. Sterling is getting a boost from having been dramatically oversold and a rumor in the UK press that G7 will talk about it (of which there is zero chance, since the UK would squelch any such thing and the agenda was set a long time ago, anyway).
Bye For Now
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