The Bank of Japan has announced that it will inject 10 trillion Yen into the Japanese economy. The move is intended to improve liquidity within the economy and allow businesses to borrow money more easily. Of course, Japan relies heavily on exports and even if money supply is more plentiful, a strong Yen will continue to handicap Japanese exporters as their products are more costly. America is a major export market for Japan and the weakness of the Dollar against all of the major currencies; not just the Yen, makes it a challenging market for Japanese exporters. It seems that the question is not if the Yen will weaken, but when it will happen and to what extent? If this reading is right, brokers who have taken substantial Yen positions will want to unload them soon whilst the currency is at its peak.
The continued weakness of the US Dollar has pushed the value of gold over the $1200 level for an ounce of the precious metal; yet another record. The price of gold on the London Bullion market hit $1201.63 yesterday. The Dollar lost ground against both the Pound Sterling and Euro yesterday, but it did strengthen against the Yen.
The UK recession has now continued for six consecutive quarters, making it the worst since records began in 1955. The UK remains the only G20 nation still in recession, but analysts expect it to return to growth in Q4. Data just released shows a weaker performance for manufacturing this month with orders sharply down. However, whilst November’s manufacturing activity figures were lower than expected, the sector still managed to expand in November. Britain’s road to economic recovery is set to be bumpy and confidence will not be helped by the General Election which must be held in 2010.
Disclosure: No positions