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Japan’s Trade Deficit Drives Dollar

dollar upThe Japanese trade deficit increased today, driving demand for the US dollar and the Yen as investors look to move their funds to safer assets. The wider-than-expected results have once again raised concerns over the current state of the global economy. All eyes have now turned to the US Federal Reserve minutes that are due to be released in a few days.

Should the minutes make any sort of suggestion that there are plans to take action the US currency could lose its recent gains in a matter of hours. The worlds largest economy, while currently one of the more stable, is currently on a knife edge and could topple based on a single piece of data, which could then snowball.

The US dollar was up 0.2% at $1.2446, making great strides after losses yesterday left it at its lowest since the beginning of July. The Yen was up 0.3% at 98.60.

Since 2008 the Federal Reserve have purchased $2.3 trillion in mortgage and debt over two rounds of QE. Another round would once again reduce the value of the dollar, plunging the markets into uncertainty.

The days biggest loser at the time of writing was the Ruble, which was down 0.4% against the US currency. It was the first time since Monday that Russia’s currency has lost ground on it’s US counterpart. The loss was on par with it’s slip against the Euro, which fell to 39.7250 – a three week low. The fall of the Ruble comes on the back of the Crude Brent price dropping.

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