Posted January 24, 2010
The Japanese yen fell against the US dollar as the global economic recovery continues to advance at an uneven pace. The Canadian dollar weakened against the US dollar as November retail sales show a decline. The Chinese yuan is expected to appreciate against the US dollar. The US dollar fell against the Swiss franc.
The Japanese yen was at 90.01 against the US dollar as of late Sunday night New York time. The global economic recovery remains weak despite ongoing signs it is in process. The problem is that one stumble could cause a chain reaction that could easily derail the recovery.
US Federal Reserve Chairmen Ben Bernanke is up for term renewal and his reappointment seems certain. This news added to dollar appreciation.
US President Barack Obama has proposed tough new banking regulations designed to limit investing by banks and the proposals dragged the equity markets down and drove investors to safe haven assets. These proposals came at the end of a week where the euro was falling in response the debt problems in Greece. In other words, this was not a particularly good week for any of the markets.
It has always been said the global recovery would not be smooth and those predictions are coming true. Growth is not going to be as fast as hoped and now there is much uncertainty entering the equity and currency markets.
The euro was at $1.4139 against the US dollar. The euro rose against the yen to 127.47 yen per euro.
The UK pound weakened against the US dollar to $1.6114.
The Canadian dollar weakened against the US dollar to $1.0560. Canadian retail sales fell in November by .3 percent. This was not particularly expected. The strong currency is putting a damper on the pace of the nation’s recovery and uncertainty over the US recovery is exacerbating the situation.
China continues to make moves that will tighten monetary policy. This will affect many emerging markets and Australia and New Zealand. Because China has not issued public statements clarifying the current monetary policy, market uncertainty has grown.
The Chinese yuan is at 6.8269 yuan per US dollar. China is expected to let the yuan rise by 5 percent against the US dollar. The central bank is also expected to raise interest rates soon in an effort to dampen too-rapid economic growth. Inflation of 1.9 percent was recorded in December.
China could become the world’s second largest economy in 2010 if the recovery in the two countries continues at the current pace.
The US dollar fell against the Swiss franc to 1.0414 francs per dollar.