Quite contrary to what I believed, the Yen has slumped below the 100 mark. And it makes for situations to be quite grim. Though even with the Us economy news being not so great, I believe the Yen may not break the 95 mark and instead try to ascend upto 100 on the back of sustained buying interest in the USD (given the fact that the pair is at a one decade low now if I am correct). I have doubt now that market pressures may be able to hold it to a level above 100 as in the recent past. If that happens though, dont expect it to scale even to levels of 105 or even above 102 and hold thereafter. As for the Rupee, it should keep itself above the 40 mark what with the rising Ooil prices.....Even if there is heavy selling by our exporter friends.

New Levels on the USD

Quite in line with what was being expected of late, The USD has now seems, found a new level vis-a-vis the Yen and the Euro. And most of the blame needs to be picked up by the macromenspeakmore habbit of the current Fed chief who today urged lenders to forgive portions of mortgages held by homeowners at risk of defaulting.

``Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping, but more can, and should, be done,'' Bernanke said in a speech to bankers in Orlando, Florida, today. ``Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.''

So it seems the USD JPY pair is now poised to test the 100 levels soon. And quite contrary to what I believed that 103 might be a strong test for the pair, it has very smoothly slid to the sub 103 levels though still testing itself to stay near 103. My outlook for the currency for the weeks to come......... should try for the 100 levels pretty soon enough. Though again getting past 102 may be a bit difficult, but if done, expect a smooth sailing to the sub 101 levels. Though I might be away from the happenings in the markets for more than a week now, I would still shy away from forecasting a sub 100 level for the next week or so. Though I feel the currency may eventually give way in the coming months. And I have reasons to believe so..... Remember Mr Bernanke saying something on some Banks failing......Watch out for that. I believe he was not saying out of turn. Also watch out for the 12,000 mark on the Dow. If it slips, and slips convincingly even for a week, then new market realignments may take place not only on the forex side, but also in other markets worldwide.

Similar is the fate of the EUR USD pair. It has been flirting the 1.52 figure for some time now and after the Fed chief's remarks today, I now tend to believe that it will be more content being near it and more precisely in the 1.53 to 1.5450 range. Though being a new territory the Euro is treading into every now and then, you never know where it may bottom out.

Till I am back again for more on these two pairs, lets say Sayonara but not before my take on the USD INR pair. I have full faith in the currency nearing the 40.80 mark by the 3rd week of March and much further if the world markets keep up with this deceleration and the Indian markets catching up with them (Though I would put a bottom of 14,800 to 15,200 for the BSE to reach before eventually bottoming out). And just to prove that I am not just writing for the sake of writing here, I will reveal a small secret. I have a small personal exposure in The Yen that I need to convert to INR or the USD and am still taking my bets on a further improvement of my small fortune.

And so the Dollar Weeps

I had last written on 29th January 2008, stating that "the green back to maintain a level of 103 to 108 against the Yen (with a bias towards 100 though beating the 103 mark may be difficult) while weakening against the Euro to near 1.49 in the very near future". The basic premise behind that was the fact that the jobless, housing and inflation data and the subprime crisis all were tending to drag the US currency outlook down. Add to it the fact that most US banks declare their balance sheets in Feb end to Mid March and that this time round, they were going to be not so rosy, thanks to the sub prime. One point I refrained from writing here (possibly out of the fear that this might be too big a prediction) but had been discussing with a few colleagues and friends, was a guess of mine that there may be a couple of Banks in the US that may fail.

Quoting now from Bloomberg "Stocks slid yesterday after slower-than-forecast economic growth, rising jobless claims and Federal Reserve Chairman Ben S. Bernanke's warning of possible failures among smaller banks deepened concern that the economy has tipped into a recession.
U.S. equities, as measured by the S&P 500, fared the worst among the world's 10 largest markets in February on concern that a recession is inevitable." Unquote.

All said and done, although the US seems sliding into recession, I believe Bernanke and his team will make all efforts to keep it low key although with the profile that this man keeps, it is difficult to do so. My personal belief on the USD JPY and the USD EUR pair now......The Yen should now keep itself to the narrower 103 to 106 range with a bias towards 100 (and now looking more possible .... below the 100 mark), though I still believe that breaking the 103 barrier may be a tough nut to crack. There though is a spoke in this story. With the Yen strengthening as it is, and with the huge comforts (I am told) that the traders had in the 105 to 108 range, it should not come as much of a surprise if the yen again climbs to those levels. Though weakening much further may be more of a distant thing. The European economy has not been hampered much in the current market sentiments and should remain to perform like it has been doing in the recent past......Moderately to be more precise. The Euro should be seeing further new highs of near 1.54 and 1.55 but staying consistently above 1.54 may be an issue. I believe the Euro will tend to keep itself happy in the 1.52 to 1.5350 range with a downward bias every now and then. Amen.