Daily Forex Analysis by Finexo.com 3/12/2009


The Japanese Yen continued its slide on Wednesday after traders continued to interpret Tuesday’s last minute meeting by the Bank of Japan, as well as a bullish stock market as a reason to unload the low-yielding safe-haven. The Bank of Japan had said in that emergency meeting that it will allocate 10 Trillion Yen, roughly 114 Billion Dollars (US), to a short-term lending program at a fixed rate of .1%. The program is viewed as an alternative to the quantitative easing policies employed in 2001 which saw interest rates drop to zero resulting in a flood of cash entering the markets.

While a majority of analysts do not expect Japan’s anti-deflationary measures to slow the rise of the Yen in the long-term, it was enough to prompt a profit taking selloff. Most of those polled do not believe the measures, which include keeping short-term interest rates depressed, are enough to curb a strong Yen, there is hope that the process itself will lead to a natural decline in the Yen’s value as opposed to a drop that is the direct result of a more invasive governmental policy.

At 11:00PM GMT, the Japanese Yen was trading down .57% to the US Dollar to 87.16, down .63% to the Euro to 131.56, down .94% against the British Pound Sterling to 145.3, down .87% versus the Australian Dollar to 80.86 and down .61% against the Swiss Franc to 87.25.


The US Dollar was mixed on Wednesday after a preliminary employment report showed an eighth straight month of better numbers, although the data did not match analyst expectations. The Dollar, which had been up most of the session began collapsing after the Automatic Data Processing November Employment Report showed a net loss of 169,000 jobs, better than the 203,000 lost in October but 14,000 more than the 155,000 anticipated by the street.

Since the financial crisis began, the US unemployment rate has rocketed from 2.9% to over 10% with some states like Michigan and California showing more than 15%. The continued slide in jobs is of great concern even amidst the positive manufacturing and GDP numbers. The overall fear is that the loss of work will begin to take its toll on government coffers as social benefits such as food stamps and rent subsidies, contributing to an already enormous debt load.

At 11:15PM GMT, the US Dollar was trading down .36% against the British Pound, down .3% versus the New Zealand Dollar to .7277, down .35% against the Australian Dollar to .9278, down .2% to the Canadian Dollar to 1.0453, down .15% against the Euro to 1.508 and down .27% to the Swiss Franc to .9987. At the time this was written, the trendlines were heading down across the board for the USD.

Written by Finexo.com