Posted December 30, 2009
The US dollar has posted an annual gain against the Japanese yen while falling against most other global currencies. The euro strengthened against the yen. The Swiss franc strengthened against the euro as the Swiss economy expands. The Brazil real has put in a strong annual performance against the US dollar. The Canadian dollar fell against the greenback and euro. Uruguay’s peso rose as exports to Brazil increased. The UK pound strengthened as housing prices rose.
There was lots of currency activity today as the year comes to a close. The US dollar has somewhat surprisingly managed to post an annual gain against the yen but that may be due more to yen weakness then dollar strength. Not too many analysts believe the greenback will hold on to its strength as 2010 unfolds. The US dollar has weakened against all major currencies in 2009 except for the yen.
But as for the end of the year, the dollar was at 92.45 yen. The dollar also strengthened against the euro to $1.4339 as the US economic recovery progresses. US economic data is expected to be issued on Thursday and Friday that will give a clearer picture of the pace of recovery and many believe the reports will generally be positive across the board.
The Japanese, on the other hand, are struggling with poor export numbers and a recovery that is weak. Deflation has entered the picture also. This has led to a weakening yen. The bank of Japan is expected to implement new programs that will attempt to ease credit in order to stimulate the economy.
The euro strengthened to 132.83 yen. The Swiss franc has been strengthening against the euro though and is now at 1.4866 francs per euro. Switzerland is no longer intervening in the currency market and the franc is now operating in the normal market. The Swiss economy has already posted an expansion in the third quarter of 2009 of .3 percent.
The Brazil real has surged against the US dollar and is expected to close 2009 at 1.75 real per dollar. Brazil has been the emerging market that has grown the fastest and exited the recovery the earliest. The Brazilian government stimulus programs provided the needed support for the economy and the financial industry. Brazil exited the recession in the second quarter of 2009 and not too many companies can make that claim. Brazil’s economy was assisted by Chinese orders.
Uruguay’s peso surged also as the country benefits from Brazil’s strong economy. The peso rose to 19.65 pesos per US dollar. On an annual basis, the peso has risen 24 percent as Brazil increased demand for Uruguay’s exports. Uruguay saw a 2.5 percent GDP growth in the third quarter of 2009.
Canada’s dollar weakened against the US dollar to C$1.0578. The loonie also fell against the euro to C$1.5130. Most of the weakening was due to investors exiting bets against the US dollar as the US recovery continues to strengthen. The short term trend right now is to short the Canadian dollar.
The British pound has not been showing much change recently, but yesterday it rose more against the US dollar then it has in two months. The pound strengthened to $1.6052 against the US dollar. It also gained against the euro to 89.17 pence per euro.
The UK housing prices rose by .9 percent in November indicating the recession is ending finally. The immediate issue that must be dealt with is how to exit stimulus programs while trimming debt without slowing economic recovery. Right now the UK is expected to have the highest debt percent of GDP at 12 percent among the G-20 nations.