Japanese Yen Follows Chinese Yuan
The Japanese Yen starts the New Year with a bang as it follows the Chinese Yuan on a fast course against the Dollar.
The Yen was trading about the 114.00 level on December 27. Today we are at about 108.40 two hours before the New York stock markets open. The Chinese Yuan continues to gain strength and is now at about 7.30 to the Dollar.
This rapid change of levels is not just in the Yen and Yuan, The US Dollar is getting hammered against the Euro and Swiss Franc to mention just a couple of currencies. The British Pound is fading against major currencies along with the Dollar as the British economy, much like the US, faces severe problems caused by the housing market and related subprime mortgage loan market. It’s time to pay the piper for the over extension of credit.
Yesterday was a heavy down day for the Dow as it lost over 200 points. At some point, probably to be reached very soon, you can expect even heavier selling of equities as investors begin to realize that a rapid fall in the Dollar is going to cause even more problems for the US economy.
The gold market is trading at all time highs at 864 as I write and crude oil is just barely below $100 a barrel. A sharply falling Dollar will only assist those largely Dollar denominated markets to move even higher. Gold at record prices should be taken as a sign that folks around the world are losing faith in paper fiat currencires, like the US Dollar.
The year from hell, 2008, is off to an attention getting start. We are likely to see extreme volatility for some time as markets seek new levels.
