Yen Falls as Japanese Investors Go Shopping Abroad, But Dollar is Held Back After Senators Kill Vote

Excerpt from our One-Page WSJ Summary:

FOREIGN EXCHANGE: Dollar and Euro Gain Over Yen As Japan Investors Move Abroad

Summary: The dollar and euro climbed against the yen yesterday. As Japanese confidence in their economy grows, Japanese wealth ventures abroad looking for investments. Yesterday, a Japanese economic report showed business sentiment among small and midsize companies improving, suggesting the country's economic recovery has spread beyond large firms. The dollar was also the beneficiary of a strong stock market and higher crude prices, both potential signs of inflation, which would preclude a Fed interest rate cut, which would in-turn damage the dollar. However, the dollar lost some of its initial gains late in the day after two U.S. senators cancelled their plans to have the senate vote on tariffs on Chinese-made goods in order to strongarm the Chinese into dealing with their undervalued yuan, one of the main causes for China's massive trade surplus with the U.S.
Related links: Full WSJ articleJapanese Business Sentiment Highest Among Large Co'sPaulson Wants Even More Flexibility in YuanThe Paulson Effect: China Hawks in Senate May Delay VoteChina's Latest Attempt to Cut Its Trade SurplusWill Debt Payments Drag Down GDP or the Dollar?U.S. Trade Deficit: Not as Ominous as it SoundsConsumer Confidence is Helping the Dollar
Potentially impacted stocks and ETFs: Euro Currency Trust ETF (NYSEARCA:FXE), iShares MSCI Japan Index ETF (NYSEARCA:EWJ)

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