The value of US dollar slips to a two-month low in comparison with the Japanese yen. The fall of the dollar is said to be triggered by the release of the Chinese official manufacturing data and this has again taken the economic recovery initiatives to backtrack. Efforts to curb the slowdown has been stalled again, experts feel.
The Chinese data created a disappointment in the Forex market and euro too suffered a jostle. The market has already been amid tough times with positive efforts were being expected from the U.S. Federal Reserve to improve the US economy. The European Central Bank (ECB) was too in the process of bettering the European economy by bringing some helpful measures. But the Chinese data spread water on all such hopes and the optimism is now has lost somewhere in a quandary.
The dollar recorded a two-month low at 77.90 yen. The second lowest in the last two months was 78.02 yen and now it slips down a further 0.1 percent. While at the same time, euro reported a 0.2 percent fall and slipped to 95.92 yen. With yen gaining more strength, investors are prompted investing in the yen. However, experts believe that this yen-buying could be motivated by Japanese investment trusts with an objective to reduce the currency exposure which could result because of customers’ willingness of fund withdrawals.
The yen is strengthening its position and is reaching closer to last year’s October’s peak value of 75.311 per dollar. With yen going strong, many investors are also apprehensive of the Japanese authorities’ intervention in the sale of yen in the Forex market. And the Chinese data failing to do anything towards repelling the impacts of global economic slowdown, all eyes are now set on the policy announcement that the Federal Reserve is expected to make in order to thwart the negative impacts of the slowdown.
The Federal Reserve is widely expected to lay out the foundation work to bolster the sluggish economic recovery. The optimism has gripped the market that bond purchases will be focused to better the economic conditions and put the recovery on the right track. Besides the Federal Reserve, the ECB is also to roll out measures with a revised bond purchase program that will be aimed at bringing down the high borrowing costs of the nations such as Spain and Italy. However, Germany’s objections are being seen as a deterrent in reviving the euro’s position. Germany is opposing the purchase of bonds using euro zone’s rescue funds and German finance ministry has expressed their opinion very clearly.
However, ECB has confirmed buying of bonds to benefit euro monetarily. But for many investors, traders and analysts, this ECB action will help euro in a temporary manner and they believe that there should be plans for a sustainable economic recovery, intending to better the economic conditions of southern Europe. Yet, optimist traders are enthusiastic of economic recovery and favorable market conditions.