I don't think anybody really thought there was going to be a sustained rally with the U.S. dollar, as after a brief rally last week had some people almost euphoric and starting to talk as if something big was happening there. Most knew better.
Today the reality of the weakness of the dollar reasserted itself, as it continues its downward spiral.
For the third day in a row the yen increased against the dollar, as Japanese investors brought their money back home as concerns credit problems will spread across the world.
"Repatriation flows are likely to pick up and this will boost the yen," said Takuma Kurosawa, global markets treasurer in Tokyo at HSBC Bank, a unit of Europe's biggest lender. "Financial market turmoil increases Japanese investors' home bias. People are genuinely worried about the U.S. economy."
The yen rose to 98.72 a dollar, up from the 99.20 it was at late Tuesday in New York. Kurosawa added that the yen could trade as high as 95 a dollar next week.
Against the euru, the U.S. dollar fell to near a record low again, as more governments and investors believe the U.S. will have difficulty avoiding a recession. It traded at $1.5806, after the more significant 1.3 percent drop it experienced yesterday.
The Chinese yuan rose to its highest level against the U.S. dollar since it dropped the peg in 2005, reaching 7.01 yuan to one dollar. That's up from the 7.0252 of Wednesday.
With the Chinese seeking to strengthen their currency, it's believe by analysts it'll drop below 7 yuan a dollar in a very short time.