Posted August 31, 2010
Bank of Japan tries to offer protection. Dollar still falls against rising yen.
The US dollar spent the day losing ground against many of its main currency competition. The US dollar lost ground against the yen as well as the Swiss franc. Investors still seem concerned about the US economic recovery moves and are headed to some of the safer currencies, of which the yen and franc are considered among the best.
However, the US dollar did manage to gain against some other widely traded currencies. Investors seemed to continue worrying about global recovery and pushed back the moves that occurred late last week that encouraged investors to move towards riskier investments.
Bank of Japan
The Bank of Japan has grown increasingly concerned about the rising yen. As such, the Bank of Japan took measures to help encourage investors. All of the ground the US dollar made against the yen in the previous week were erased during the Monday currency trading session. This was ahead of the Monday meeting of the Bank of Japan, that was called as an emergency. Many investors sold off the yen with the expectation that the there would be stronger measures applied rather than an extension to the loan program. Investors did not seem impressed with the way that the yen was being managed and the country's currency continued to grow.
Most investors believed that such steps were not really something new or helpful and therefore they were already taken into consideration with the currency's current valuing. Investors want the yen to rise. Some believe that the yen will move closer to the 15 year highs seen during last week's trading session. Some even believe the yen will move even higher against the US dollar than that.
The US dollar remains at a level close to that of the 15 year low it hit last week during the trading session. In addition, it is only about four yen above the point where the US dollar hit the lowest point ever against the yen, in April of 1995. At that time, it hit Y 79.75.
The markets around the world were slower on Monday. This was due to the national bank holiday occurring through the United Kingdom. Trading volume was lower which also resulted in smaller movements having a larger impact on the day's gains.
By the Numbers
By late in the afternoon, the euro moved from US $1.2734 to US $1.2663. The US dollar moved from Y 85.35 as of late Friday trading to Y 84.55 for the day. The euro moved from Y 108.72 to Y 107.09. The UK pound moved from US $1.5513 to US $1.5459. The US Dollar moved from CHF 1.0293 to CHF 1.0261. The ICE Dollar Index, which tracks the US dollar against a basket of its commonly traded currencies moved the US dollar from 82.875 on Friday to 83.160.
Also, the euro moved closer to its all time low against the Swiss franc during the trading day. It hit CHF 1.2971 before it rose.