Yen Up Against 13 of 16 Major Currencies
http://www.interbank-fx.net/2009/06/yen-up-as-us-payrolls-prompt-safe-haven-demand/yen6/The Japanese yen rose against the S. African rand and the New Zealand dollars ahead of a US report that economists believe will show increasing unemployment in the US which could increase demand for safe haven assets. The yen also rose against 13 of the 16 major currencies. The increase came after remarks by US Federal Reserve Chairman Paul Volcker stating that US recovery is “years’ away. Shoichi Handa of SBI Liquidity Markets Co stated, “People are cutting short positions on the yen in a hurry before major economic events in the U.S., which may drive the market’s direction. If the ADP report today contains a negative surprise, the yen may be bought actively.”
Rising Risk Sentiment Driving Currency Exchange Rates
The yen to dollar exchange rate was at 95.61 while the euro to dollar rate is at $1.4320. Rising risk sentiment has been largely driving currency exchange rates for the past two weeks. Markets seemed to have shrugged off remarks by Volcker who stated that “truly massive fiscal and monetary stimulus is at work, a full recovery will be a matter of years” and that the US economy faces “an unimaginable budget deficit as far as one can see.”
Russia Suggests New Reserve Currency
Also affecting the dollar and currency exchange rates were earlier remarks by Dmitry Medvedev who suggested the need for new reserve currencies to replace the greenback. Susumu Kato of Calyon Securities stated, “Emerging markets are thinking that there are risks associated with the dollar, which will have some negative impact on the forex markets. This kind of talk will have negative implications for the dollar.”
Dollar at 2009 Low
The dollar vs. euro exchange rate is now at its lowest in 2009. Strong US housing sales data reinforced risk appetite and affected global currency exchange rates. Pending US home sales posted their biggest increase in 7 ½ years boosting confidence that the worst of the global recession is over and pressuring the dollar downward. Results of several European central bank meetings are not available yet but are bound to affect global currency exchange rates.
