Market News

As reported at 8:52 a.m. GMT, the USD lost ground versus the Euro and other high yielding currencies in early morning trading today, as equity markets sought to recover some significant losses from yesterday’s trading day. Nonetheless, trading activity was somewhat restrained because investors are taking a wait-and-see stand, with the expectations that continuing concerns about the health of the various financial systems and a worsening global recession will curtail any movement into risky assets.

As reported at 9:03 a.m. GMT on March 2, 2009, in London, the USD hit a 3-year high against a group of currencies as news spread that the United States federal government plans to inject additional money into the struggling American International Group and this prompted investors to buy the U.S. Dollar as a safe-haven currency. According to reports, the federal government is ready to inject about $30 billion lifeline into AIG as the company prepares to report a huge quarterly loss today, the largest quarterly loss in U.S. corporate history.

At 12:33 p.m. JST, the Japanese Yen took an upturn, rebounding sharply from a 3-month long low versus the U.S. Dollar, and making gains against most major currencies, while speculators benefited from profit-taking on the U.S. Dollar after its run against the Yen. The Japanese Yen had lost nearly 11% versus the U.S. Dollar since it touched on a 13 year high last month; likewise, it lost nearly 10% versus the Euro, and the slide deepened after the release last week of poorer than expected GDP numbers and the Japanese finance minister’s resignation.

On February 26, 2009 at 3:12 p.m. in Tokyo, the Japanese Yen fell to a 3-month low against the U.S. Dollar and a 7-week low versus the Australian dollar, as investors’ bet against the currency mounted, aided by worries about the outlook for the Japanese economy.

On February 25, 2009 at 3:37 p.m. in Tokyo, the Japanese Yen dropped across the board, hitting a fresh 3-month low against the U.S. Dollar as investors no longer perceive the Japanese Yen as a safe-haven, because of the rapid weakening of the Japanese economy and the associated domestic political worries.

In early morning trading in London today, the U.S. Dollar touched on a 3-month high versus the Japanese Yen while investors continue to shed the Japanese currency in the face of continued persistent worries about financial institutions. According to a currency strategist at UBS, the markets have basically stopped looking to the Japanese Yen as a “safe” currency, amid continued concerns and deteriorating confidence in the faltering Japanese economy.

On February 23, 2009 at 3:44 GMT in Tokyo, the U.S. Dollar fell against the Euro and the Japanese Yen as share prices jumped after reports that Citigroup was contemplating the possibility of the U.S. government taking up as much as 40% of the company’s common stock.

In trading in Tokyo today, the Japanese Yen had small gains, but remained in striking distance of a 6-week low versus the U.S. Dollar, and a month-long low against the Euro. All this as investors continue to worry about the health of the Japanese economy. According to a foreign securities manager from Okasan Securities in Japan, very few investors are aggressively picking in the Japanese Yen, because most investors don’t find Japanese assets appealing right now. Any gains in the Yen is attributed to carry trade unwinding, where investors use lower yielding currencies to finance their purchase of assets and currencies elsewhere that are higher yielding.

Today, February 19, 2009 at 2:56 pm (JST) in Tokyo, the U.S. Dollar dipped after hitting a 6-week high versus the Japanese Yen and a 3-month high against the Euro, but it remained firm as U.S. government’s efforts to address the housing crisis supported its safe haven appeal.

On February 18, 2009 at 7:29 GMT in Tokyo, the Euro resurged from a 2-month low against the U.S. Dollar, but worries remained about the health of the regional banks, following warnings from ratings agencies which prompted concern over the impact of a profound recession in Eastern Europe.

In early New York trading, the Euro suffered a major loss, falling to its lowest point in almost three months versus the U.S. Dollar, following the Moody’s credit rating service threat to downgrade those major European banks which have significant risk exposure in Eastern Europe. According to a senior currency strategist located in Toronto, Canada, investors are looking closely at the bad news coming out of Eastern Europe, including the prospect of a prolonged recession, and the recent GDP slide in Japan’s economy.

In Tokyo trading today, February 16, 2009, the Japanese Yen gained against other major currencies after the G-7 finance ministers, at their weekend meeting, made no specific references to the strength of the Japanese currency. The Japanese Yen edged up, although the latest data showed that the Japan's economy shrunk sharply during the final quarter of last year, as investors felt that the numbers are reasonable and are within expected ranges. Japan's Gross Domestic Product fell by 3.3% in the 4th quarter of 2008, or an annualized 12.7%, the sharpest drop since 1974 during the first oil crisis.

Today in early Tokyo trading, the Japanese Yen and the U.S. Dollar fell broadly as stock markets in the region rose on hopes that the U.S. government is planning to subsidize mortgages in the U.S. and as investors prepare for the G-7 finance officials meeting, currently being held in Rome.

The U.S. Dollar and Japanese Yen rose today as investors felt comfortable with the perceived safety of both currencies as stocks fell, prompted by concerns about the effectiveness of government policies to curb recession and rescue the ailing banks.

The Pound Sterling lost ground versus other major currencies in London trading today following the release of a report issued by the Bank of England which opened the door for additional monetary easing. The quarterly Inflation Report revealed that the Bank of England is predicting a sharp pull back on inflation, below the set target. One Bank of England official suggested that additional easing of liquidity may become necessary. That statement sent short Sterling rate futures markedly higher and the Pound Sterling lower as forex markets scurried to set prices within the relaxed monetary policy.