US, Japan and Europe Daily FX Update

It was fascinating to watch yesterday, as President Obama was signing the 800 Billion Dollar economic stimulus package, the US stock markets were falling – I guess the traders and investors on Wall street were not too happy with the idea of severe regulation combined with massive spending on nonsense. Forex brokers trading in the USD though had a different kind of a day. The US dollar, while it should be falling based on all this spending that the government is doing, was rising – sharply in some instances.

The problem around the world is that there are problems around the world – and they keep getting worse. Japan, for a while looking to hamper the strength of Yen to offset losses to the export business it thrives on, sobered up when they realized that their economy has fallen more than at any point in 35 years – which is scary because they are still feeling some effects from their 1990’s prolonged recession. Those investing and trading in the Yen have been hit hard as the Yen has fallen to even the lowly Euro recently.

Speaking of the Euro, yesterday the EU got word from not one, but two rating agencies letting them know that the sovereign debt of many EU members states is in jeopardy of having a ratings cut. This is not a shock considering that many Western European states are the primary debt holders for much of the Eastern bloc countries who have been hard hit as of late. President Obama had said yesterday, I guess to cover himself when this plan does not do what he says it will, that “the economy is going to get worse before it gets better” – in the EU’s case, Forex traders are wondering if it will ever get better or is there some major restructuring of the way they do things that needs to get done. I expect the Euro to continue its slide.