Friday, 20 Nov 2009

Dollar and Yen Continue to Advance on Declines in Equities

The Dollar rose against most of its major counterparts Friday, climbed for a 2nd day against the EUR. The Yen also advanced against the EUR as stock indexes around the world dropped, discouraging demand for higher yielding assets. The USD headed for its fourth straight weekly loss versus the JPY, trading near a six week low on speculation the Federal Reserve will keep interest rates near zero to encourage economic growth.

The Dollar strengthened 0.5% to $1.4847 per EUR, from $1.4925 yesterday, touching $1.4802, the weakest level since Nov. 4. The yen appreciated 0.6% to 132.07 per EUR, from 132.79. The USD was little changed at 88.96 Yen, compared with 88.97 yesterday.

The recent uncertainty regarding the strength of the global recovery seems to lead financial markets. Confidence among investors regarding a speedy economic recovery was discouraged by this week's poor economic reports for retail sales, industrial production and the housing market as well as Federal Reserve Chairman Ben Bernanke's speech earlier this week. This uncertainty has made range trading the standard for a many currency pairs.