Japan is becoming the stuff good horror movies are made of. Traders were spooked this morning by first-quarter gross domestic product numbers that showed a contraction of 0.2% in Japan's economy for the first three months of 2001, well below expectations the economy would grow 0.2%.
Traders ran from the yen, sending it down to new two-and-a-half week lows against the dollar and two-week lows against the euro. The dollar rose to 121.91 yen per dollar on concerns Japan is heading for its second recession in two years and its fourth in the past decade. The dollar closed at 120.97 yen per dollar on Friday.
The price of yen for euros was barely changed recently, as Europe's own set of worries weighed on the single currency. The euro traded for 102.88 yen per euro this morning, barely off Friday's close of 102.87 yen per euro.
Hopes were diminished for additional rate cuts from the
European Central Bank
after member Guy Quaden commented publicly this morning that current eurozone interest rates are adequate in relation to recent economic data. He also said the eurozone economy is slowing more rapidly than was expected, but the ECB still thinks growth of 2% to 2.5% this year is possible. The euro slipped to $0.8441, down from $0.8506 at last week's close.
And despite an early rebound this morning in the British pound, the currency fell below the 15-year lows it set against the dollar last week. On Thursday, the
won another landslide election. The victory raised fears among traders a referendum on the UK joining the
-- and the pound merging with the euro -- would be pushed to a higher priority.
Some concessions the Labour Party would maintain its wait-and-see policy concerning the euro pushed the pound higher this morning. But concerns outweighed hopes, and sent the pound tumbling down to $1.3763. The pound closed last week at $1.3784.
The U.S. currency is posting gains today against the other members of the dollar bloc. The Australian dollar slipped recently to $0.5229, down from last Friday's close of $0.5248. The U.S. dollar meanwhile strengthened against its northern neighbor, climbing to C$1.5182, from C$1.5172 at last close.