The USDX futures contract is designed to replicate the performance of being short the US Dollar against the following currencies: Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.
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Here's what he suggests: The U.S. dollar, the euro and the Japanese yen (with, perhaps, China's yuan and Britain's pound) would form a currency bloc.
Eighty percent of Coca Cola earnings come from outside the US. During the latest world monetary turmoil, the dollar has appreciated rapidly against both the Euro and the Japanese Yen.
In 2005, when China last released the yuan from its dollar peg, analysts believed that the U.S. dollar, the euro, the Japanese yen and the South Korean won dominated the basket, but that the basket also included the U.K. pound, the Thai baht and the Russian rouble.
But more recently the dollar has risen against the Japanese yen, the euro and other currencies.
Over the same period, the yuan has declined by approximately one percent against the euro and 2 percent against the Japanese yen.
The recent intervention to prop up the euro by the European Central Bank was warmly received by Japanese authorities since there was also support for the euro against the yen.
In addition to weakening by 6 percent against the yuan, the greenback is now 9 percent lower against the euro, and 7 percent lower against the Japanese yen, as compared to one year ago.
The dollar has been falling for weeks against major currencies, reaching record lows against the euro, a three-year low against the Japanese yen and a seven-year low against the Australian dollar.
While the Japanese yen, Canadian dollar and the euro have risen 33%, 43% and 73% against the dollar since mid-2001, all have registered major declines against the more objective measure, gold.
If you entertain bullish views, check out the Rydex CurrencyShares Japanese Yen (FXY) and the CurrencyShares Euro Trust (FXE).
The dollar is down 2.7 percent against the euro, but up 5.7 percent against the Japanese yen and 2.5 percent against the British pound.
The British bank has prepared a list of global currency reaction to a continued euro slide, suggesting the U.S. dollar, the Japanese Yen (JPY), and gold remain the most attractive portfolio hedging options, while other emerging market currencies provide interesting trading prospects.
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Among the bets the Pure Alpha fund placed last year were long positions in Treasury bonds, the Japanese yen, and gold, and short positions in the euro and European sovereign debt.
Japanese exporters were damaged by a higher yen, especially against the euro, making it harder to sell into Europe.
The dollar cooled a little against both the yen and the euro after reaching multi-month highs against the Japanese currency on Thursday.
The strong yen and the European financial crisis are related because as investors dump the euro, they look for what they feel are safe haven currencies like the Japanese yen and the Swiss franc.
The euro fell by 1% against the British pound and twice as much against the Japanese yen while it is down by almost that amount against the Swiss franc in what many regard as a litmus test for the stability of the region.
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This forecast is lower than what many analysts expected, though Canon based its projections on assumptions that the yen will continue to rise against both the dollar and the euro, making Japanese exports more expensive in Western markets.
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The Japanese yen extended its losses against both the U.S. dollar and the euro following the central bank's easing measures.
No longer the automatic safe haven of choice, the dollar has lost around 10% of its value against the euro since the start of the year (and has fallen at a similar pace against the Japanese yen).
To add to its woes, the debt crisis in the eurozone and weak recovery in the US have seen many investors flock to safe-haven assets such as the yen, resulting in the Japanese currency strengthening against the US dollar and the euro.
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In contrast to the euro, the strength of the yen until recently seemed to pose something of a puzzle, for the Japanese economy is still ailing.
Euro depreciation: Since January 1 of this year, the euro has depreciated by more than 10% against global currencies such as the U.S. dollar, the Japanese yen and the Chinese yuan.
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