Wednesday, December 30, 2009

The March Japanese Yen fell sharply overnight, taking out the late October bottom at 1.0847, on its way to a three-month low. Concern over a potential bankruptcy filing by Japan
Airlines is putting pressure on the Yen. Stories are also circulating that Japan’s AA rating is in danger of being cut if the country does not shore up its debt situation. Finally, traders are also
factoring in potential action by the Fed in 2010 that will lead to higher interest rates and a stronger Dollar.

A contraction in Euro Zone money supply is pressuring the March Euro. This news was unexpected but could cause issues in the short-run as it could lead to a credit crunch. This is
important to note because of credit problems in Greece, Spain and Portugal. So far the European Central Bank has not offered any aid to these regions. Tightening credit conditions could mean that the
ECB may not be in a position to offer relief to these troubled regions if problems accelerate.

The March British Pound is under pressure this morning …