Posted October 13, 2009
The yen hit a rate of 89.82 yen against the US dollar as investors move away from safe haven currencies. The New Zealand dollar rose as retail sales increase proving recovery is underway. The Canadian dollar strengthened also. The Mexican peso rose as budget agreement seems possible.
The yen is weakening against most major global currencies as investors shed some of their cautiousness and turn away from safe-haven investments. The yen fell to a 2-week low at one point yesterday when paired with the euro reaching 133.32 yen at one point.
The yen also fell below 90 yen against the dollar to 89.84 yen. The news that global earnings are rising is luring investors into higher-yielding markets. Stock markets are rising even as safe haven currencies weaken. Emerging markets are also attracting investors ready to restore lost earnings.
New Zealand’s retail sales were reported to have gained more in August then they have since. The Ford Motor company indicated its European car and truck sales are climbing. The Euro-Zone’s statistics office is expected to issue a report indicating August industrial production rose. These are all signs that global economic recovery is underway.
The US dollar remained stable against the euro at $1.4773. The New Zealand dollar, nicknamed the kiwi, rose to 73.63 US cents. Australia has raised its benchmark rates and the currency has remained about the same against the US dollar. On Aussie is equal to 73.23 US cents.
There was not a lot of activity yesterday because the US, Tokyo and some Latin American countries were on holiday with some or all of the financial markets closed. This has made a quiet start to this week, but that will change as some of the largest US companies operating globally begin to release third quarter earnings reports.
US interest rates are not expected to increase for some period of time. The US Federal Reserve said the rates would not be raised until there are economic indications they need to be raised, and those indications do not exist yet. The expectations of continued low interest rates are contributing to the weakening US dollar.
The US is faced with a staggering national debt and the need to borrow trillions of dollars. The risk that inflation is lurking in the near future is quite high. On the converse side of the weakening dollar are stronger global currencies. This could have a significant and negative impact on the resumption of a normal export market.
The Canadian dollar rose against the US dollar to C$1.0351 as the Canadian economy improves. Employment figures show an improving economy and employment is now rising.
The UK pound fell to $1.5729 against the US dollar after reports the country’s benchmark interest rates would be left unchanged for all of next year.
The Mexican peso has strengthened against the US dollar to 13.2495 pesos per dollar. The gains are due to the belief that President Felipe Calderon will be able to balance the 2010 national budget through tax increases and spending cuts. There has been heated discussion occurring at the Congressional level because not everyone agrees that Calderon’s plan is a good one. But unless agreement is reached, Mexico stands a good chance of having its credit rating downgraded yet again.