The Japanese yen strengthened to a 2-month high when it hit 130.10 against the euro.  The rise is attributed to the fact the US economy is faltering again giving credence to those economists who have said all along that stimulus programs are temporary fixes.

US unemployment continues to rise and that is leading to investor risk aversion. In September an additional 263,000 jobs were lost in the US. Unemployment now stands at 9.8 percent.   There were also disappointing manufacturing numbers reported proving the world’s largest economy is having difficulty shaking off the recession.

The US dollar also rose against the euro to $1.4534 per euro. The yen strengthened against the US dollar to 89.52 yen per dollar. The Dollar Index held steady at 77.170.

The G-7 meets this weekend and the strengthening euro will probably be one of the many topics discussed.  A euro growing too strong will reduce export profits and slow economic recovery.  But it remains to be seen if the G-7 will issue a public statement because public statements have an impact on currency values.  In addition, the G-20 has assumed a role as the world’s monetary spokes group.

The Mexican peso fell to a one month low on the news of worse than expected US unemployment.  The peso fell to 13.7619 peso per US dollar.  Mexico’s peso is one of the worst performing currencies against the US dollar yesterday.

Up to eighty percent of Mexico’s exports are sent to the US.  With unemployment still rising the chances of consumption rising are slim. This will negatively impact Mexico’s exports and thus the nation’s GDP. This is bad news for Mexico which is still trying to balance its budget for the next fiscal year.  There is disagreement between the political parties as to whether taxes on Mexican businesses and consumers should be increased to generate more revenue.

Because of the falling peso, the Mexican government decided to suspend a $50 million auction.  The current Mexican debt level is 40 percent of the GDP.

The Russian ruble rose against the euro to 43.8228 rubles per euro.  The ruble held steady against the US dollar. The ruble is measured against a basket of currencies made up of euros (45%) and dollars (55%).  The ruble is managed within a pre-established band of 26 to 41.

The UK pound strengthened against the euro as the UK economy shows signs of an increasing pace of recovery.  The International Monetary Fund increased the 2010 UK’s GDP growth forecast for the year 2010 to .9 percent. The increase in the projection is due to rising house sales and exports.

The UK pound rose to 91.14 pence per euro. This was good news because it is generally believed the pound had weakened too much against the euro.  The Bank of England has been managing a policy of quantitative easing which will not be expanded.

The South African rand fell to 7.6784 rand per US dollar which was a 2.1 percent depreciation.  The size of the fall was due to the failure of a proposed merger between 2 large phone carriers – Bharti Airtel Ltd and MTN.