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Market News – Japanese Intervention Gets Yen Back Under Control

In an expected move, Japan intervened in regards to their currency to help protect their economy and financial recovery. This comes as no surprise to anyone.

Japan sold one trillion Yen to help bring the price back down on par to what they think it should be fundamentally. When you match that with the easing of monetary policy by the Bank of Japan, it is clear that the Japanese took drastic action to get everything back under control.

Unfortunately, many analysts think that the issues are far from over when it comes to Japan. The reason the Yen was gaining so fast was not because of domestic policy, but what was happening around the world. These things Japan has no control over, so in the long run, they may just be back where they started.

Japan can continue to intervene and do all they can to keep their currency under control, but if their economy continues to recover like it is, and the US and Europe financial crisis’ continue in the way they are, there may not be much they can do about it. If this does happen and the Yen goes back up, the Japanese recovery may slow and bring the currency back down on par to where it should be naturally, but not without damage to the Japanese economy.

 

Spain To Offer Bonds Ahead Of Meeting

With the ECB meeting coming up a little later on this week, Spain has decided to issue about 3.5 billion Euros worth of bonds on Thursday. Even though Spanish yields have been breaking record highs this past week, Spanish officials still think it is the best thing to do and the bond offering will go on as planned.

Unfortunately, if the yields stay as high as they currently are for an extended period of time, analysts fear that Spain could be heading the way of Greece and Portugal – dismal economic performance followed by an international bailout.

Investors and Spain as a whole may be hoping that some positive news comes out of the ECB meeting this week. Many hope that they will reinstate the emergency programme after a four month absence, but there is resistance on this as well.

The ECB also may indicate that it will not raise interest rates in the near future because of a lackluster performance by the European economy. We will have to wait and see what the results are after this meeting is complete.

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