Mixed Bag of Currency News in Market

Posted February 12, 2010

Currency markets were a mixed bag of news. The euro fell against the US dollar and the Japanese yen as the region struggles with massive debt problems. The Australian dollar strengthened against the US dollar and the yen on renewed hope for higher interest rates. The South Korean won rose against the dollar. The Argentinean peso fell against the US dollar. The Brazil real strengthened against the US dollar.


The euro weakened against the US dollar and the Japanese yen as the Euro-Zone continues to struggle with gaining footing in the recovery process. The euro fell to $1.3667 against the US dollar and to 122.57 yen.

Economist reports to be released are expected to show that industrial production in the region slowed in December. In addition, the efforts to find a solution to Greece’s debt problem do not seem to be going well. The concern is that if Greece is given debt relief then the European Commission will have to provide the same relief to other member nations in financial trouble. These nations include Spain and Portugal right now and others may follow.

In addition, Ireland has forced civil servants to take a 10 percent pay reduction in order to adhere to European Union budget rules. Germany does not believe it is good policy to force some countries to take harsh steps to bring budgets back into line while bailing out others.

Germany is resisting a financial bailout for any Euro-Zone nation. Germany does not believe financial assistance should be given to Greece even while accepting that a unified response from the EU is needed.  Yet bond values of the debt laden countries are at risk if a debt reduction plan is not in place soon. Greece’s budget deficit is currently at 12.7 percent of Gross Domestic Product. The lack of information coming out of the meetings of European Union policy makers is making investors nervous. 

Because of that nervousness, German Chancellor Angela Merkel and other policymakers said there would be coordinated action to assist Greece.

The Australian dollar continues to strengthen on renewed expectations for interest rate increases by June. The Australian economy is performing exceedingly well as economic recovery progress is made. The Aussie is at 79.73 yen and buys 89.00 US cents. The New Zealand dollar fell to 69.75 US cents and 62.48 yen.

The US dollar fell to 89.64 yen.

The dollar index is at 80.073 and is remaining stable. The US January retail sales data will be released next week.

The UK pound was at 140.61 yen. Analyst technical data indicates that the pound will most likely weaken against the yen having failed to reach resistance level.

China reported that inflation data is lower than expected meaning that monetary policy will not have to be tightened as much as was believed might be necessary. The South Korean won rose to 1,155.60 won per US dollar.

The Taiwan dollar rose to NT$32.098 against the US dollar. The Indonesia rupiah is at 9,365 rupiah per US dollar.

There were a number of economic reports released in Latin America yesterday and early this morning New York time. In Argentina, the consumer price index rose by 1.1 percent. The Argentinean peso fell to 3.8490 peso per dollar.

The Brazilian real rose to 1.8433 reais per US dollar.

The Mexican peso also continued its upward trend to 12.9515 pesos per US dollar.