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Japanese Yen Holds Strong as NBER Confirms the US Entered Recession in December 2007
Monday, 01 December 2008 16:37:44 GMT  |  Terri Belkas, Currency Strategist
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The National Bureau of Economic Research (NBER) has confirmed that the US entered recession in December 2007, as US GDP fell 0.2% during Q4 2007. While GDP actually rose during Q1 and Q2 2008 by 0.9% and 2.8%, respectively, and then subsequently dropped 0.5% in Q3 2008, the NBER does not judge a recession to be 2 consecutive quarters of negative GDP. Instead, the group looks at other indicators as well, including employment, industrial output, and wholesale-retail sales. Indeed, while the chart below has not been updated following this latest announcement, a look at historical unemployment figures shows that US economic conditions have been dour for quite some time.

recession_120108


The news has kept US stock markets down more than 5%, and leaves the Japanese yen the strongest of the major currencies as risk aversion and deleveraging work in the low-yielder's favor. If equities and other risky assets continue to take a hit, the Japanese yen could easily take its late-October highs. 

recession_120108_1
Source: Bloomberg

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