Yen Crashes on Forecast of Further Monetary Easing

Yen Crashes on Forecast of Further Monetary Easing


USD continues climb

The US dollar has been gaining ever since the announcement of the agreement for providing an aid package of 44 billion euros divided into three tranches. The consolidation of the market has provided the US dollar with strength. A strong report for US consumer confidence is also providing the dollar with strength. The consumer confidence indicator was at its highest rating in November since February when it posted a 73.7 reading. The October rating was at the level 72.2. The Richmond Fed Manufacturing jumped from -7 to 9 in November instead of the staying at a negative value.



Euro falls from the maxima achieved as the Greece debt deal vanishes

The euro fell in comparison to the dollar for the first time in five sessions. The month high it reached against the dollar saw a rebound as the agreement on the Greece debt aid was balanced by concerns over the rest of the euro zone. The euro fell to a low of $1.2922 after data revealed that the consumer confidence in the U.S. had risen to its highest level in four years indicating a rise in demand. The news on agreement of the euro zone finance ministers and International Monetary Fund on releasing the aid loans to Greece has made the euro to cross the $1.30 mark. The 12 hour meeting led to a decision of decreasing the Greek debt by 40 billion euros which is from 175 percent of the GDP to 124 percent of GDP.



Yen falls due to increased pressure on Bank of Japan to ease their currency

The yen has declined by four percent in the last two weeks and has continued its decline as the monetary policy will see a rapid change as the likely winners of the December 16 elections will support unlimited easing of the currency. Shinzo Abe looks to achieve an inflation target of 2 percent which would require unlimited easing of the currency via negative interest rates and aggressive printing of the yen. The yen was at 82.10 yen per dollar on Tuesday, weakening from 79.40 yen per dollar that it traded in mid-November when Prime Minister Yosihiko Noda had yielded to pressure on early elections. Though there are many critics to Abe’s policies that may try to drop some of his ideas and limit a few of them.


Crude Oil

Crude oil falls

A drop in equities and easing of tensions between Israel and Gaza led to a fall in oil futures. Light sweet crude fell by 67 cents or by 0.75 to $87.64 a barrel and Brent crude fell by 48 cents or 0.4% to $110.90 per barrel. The elections in Spain and concerns on Greece debt issue introduced a slump in the oil futures. The tensions of the Middle East are being outweighed by the weak demand of the global economy that has led to this decline. Also the ceasefire between Israel and Hamas has managed to hold which eased tensions a little bit.