The Euro dropped to a one-week low versus the Japanese Yen and the U.S. Dollar today following the release of poor economic data by the Federal Reserve Bank, which underlined the critical situation of the global economic conditions, thus prompting renewed interest in lower-yielding currencies.
The Japanese Yen rallied in all markets, as the approximately 3% fall in European stock shares kept demand high for the Japanese Yen, which was used to buy higher-yielding assets such as the Euro, the New Zealand and Australian Dollars.
According to head of currency research, David Woo, of Barclays Capital in London, investors are giving up hope that the economy will recover soon, and he expects to see additional gains in the Japanese Yen because of further losses on the S&P.
On November 20, 2008 at 09:09 GMT, the Euro dropped by 0.7% against the Japanese Yen to 119.22 Yen, after hovering near a week long low of 118.59 Japanese Yen during the day. However, the Euro slipped by 0.2% against the U.S. Dollar to $1.2495.
The U.S. Standard & Poor’s 500 index fell to its lowest level since 2003. According to some analysts, moves in the Japanese Yen have closely followed the stock index, and as such, a further drop in the S&P is likely to push the Japanese Yen higher.