By: Barbara Zigah
Investor optimism over the Goldman Sachs earnings report which is expected to be released later this week has precipitated the fall of the Yen versus the U.S. Dollar and the single currency Euro in trading in Asia today. It is believed that the report will show a better than expected earnings figure, and is encouraging a move into higher-yielding, riskier currencies. As reported at 3:06 p.m. in Tokyo, versus the U.S. Dollar, the Japanese Yen slipped to 93.33 Yen on the EBS trading platform; against the Euro, it dropped to 130.49 Yen, off from yesterday’s New York trade of 130.08 Yen.
The reason investors expect to see strong earnings from Goldman Sachs is because of an upgrade to “Buy” status from the previous “Neutral” of the bank’s rating, issued by Meredith Whitney, a well-known and influential banking analyst. Her upgrade helped to boost Goldman’s stock price by 5% on the day. Currency speculators, assessing that the health of the U.S. financial system is improving, moved quickly into riskier currencies to benefit from the higher interest rate yield.
Investors are awaiting the release of last month’s retail sales data from the United States which is a measure of consumer demand. Some analysts have forecast that retail sales will have shown an increase of .5% over the previous month. Should the analysts’ predictions prove false, high yielding currencies would likely suffer declines as a result.