Nov. 26 (Bloomberg) -- The dollar dropped to a 14-year low against the yen. Asian stocks declined, led by Japanese exporters, and European stocks fell.

The yen strengthened 0.5 percent versus the dollar to 86.89 at 7:10 a.m. in London. The MSCI Asia Pacific Index fell 0.4 percent and Japan’s Topix Index lost 0.5 percent, dragged down by automakers. The Dow Jones Stoxx Index of European companies lost 1 percent. Gold dropped 0.3 percent after earlier rising to a record $1,196.80 an ounce.

The dollar fell to the lowest since July 1995 after the Federal Reserve said on Nov. 24 that its drop was “orderly,” a signal to traders that the U.S. won’t prop up the currency as the world’s largest economy recovers from the first global recession since World War II. The dollar’s decline threatens profits for Asia’s exporters after the MSCI Asia Pacific Index gained 32 percent this year to trade at 1.5 times book value, up from 1.03 in March, according to data compiled by Bloomberg.

“I’m not going to risk uncertainty when I’m sitting on nice gains for my portfolio,” said Roger Groebli, Singapore- based head of financial market analysis at LGT Capital Management, which oversees about $75 billion in assets. “The weak dollar is hurting Japanese exporters and their competitiveness.”

‘Watching These Movements’

Japanese Finance Minister Hirohisa Fujii said the government needs to take action on abnormal currency movements, remarks that failed to prevent the yen’s advance.

“I am watching these movements, right now it’s time to watch them closely,” he told reporters in Tokyo today. “We need to take appropriate action against abnormal movements.”

Fujii said yesterday that the dollar’s weakness is spurring the yen’s gain. Today he said “a strong U.S. dollar is in their national interest. There is no change in our support for that.”

While the U.S. currency fell against the yen, the Dollar Index, which tracks the greenback against the currencies of six trading partners, rose 0.3 percent to 74.500 after reaching a 15-month low yesterday. Standard & Poor’s 500 Index futures fell 0.8 percent, and U.S. markets are closed for the Thanksgiving holiday.

Fed officials said in minutes of their Nov. 3-4 meeting released on Nov. 24 that the dollar’s decline has been “orderly” and that they would watch for any signs that the depreciation is pushing up people’s expectations for inflation.

Record-low interest rates might fuel “excessive” speculation in financial markets and possibly dislodge expectations for low inflation, according to the minutes. Policy makers agreed that the chances of such effects were “relatively low” and they will remain alert to the risks.

Japan Stocks

Japan’s Topix declined 0.5 percent to 829.56. Honda Motor Co., which generated 42 percent of its sales from North America in the third quarter, lost 1.1 percent to 2,765 yen. Pioneer Corp., which makes car-navigation and audio equipment, sank 0.4 percent to 240 yen.

“The strong yen will curb a further rebound in corporate earnings and weigh on investor sentiment,” said Mitsushige Akino, who oversees the equivalent of $450 million in Tokyo at Ichiyoshi Investment Management Co.

The Shanghai Composite Index fell 3.6 percent after China Minsheng Banking Corp. became the first of the nation’s lenders in four years to fall in its Hong Kong trading debut. Minsheng dropped 3.1 percent to HK$8.80 after raising HK$30.1 billion ($3.9 billion) in the city’s biggest public share sale since April 2007.

China Banks

The decline added to concerns about Asia’s banks, which need more capital. China’s five largest banks submitted preliminary plans to regulators earlier this week, according to four people with knowledge of the matter. Industrial & Commercial Bank, the world’s third-largest company by market value, lost 2.8 percent.

Stocks rose earlier after Indonesia’s central bank raised its 2009 growth forecast to as much as 4.5 percent and economists estimated Taiwan will say later today that gross domestic product contracted the least in a year during the third quarter. U.S. indexes rose yesterday as U.S. reports showed new home sales beat analyst forecasts and jobless claims fell, spurring optimism the world’s largest economy is recovering from the first global recession since World War II.

Australia’s currency declined 1.2 percent 92.11 U.S. cents, nearly undoing yesterday’s 1.4 percent surge on prospects the Reserve Bank of Australia will raise rates for a record third month next week. The so-called Aussie lost 1.7 percent against the yen after the nation’s statistics bureau said capital spending declined 3.9 percent from the previous quarter. The New Zealand dollar declined 1.4 percent to 72.22 U.S. cents.

Taiwan Dollar

Taiwan’s dollar was little changed at NT$32.24 to the U.S. currency. Gross domestic product shrank 2.6 percent in the three months through September, the least in a year, according to the median estimate of 17 economists in a Bloomberg News survey. The government will announce the figures at about 5 p.m. in Taipei.

Vietnam’s dong plunged as much as 3.4 percent to a record low of 18,500 against the dollar in Hanoi after the central bank devalued the currency to curb quickening inflation and a widening trade deficit. The VN Index sank 4.1 percent, the lowest since Aug. 7.

Gold for immediate delivery climbed to as high as $1,195.13 an ounce, compared with yesterday’s close of $1,191.80. Zinc futures in Shanghai rallied as much as 1.8 percent to 19,000 yuan a ton before trading at 18,415 yuan.

“Metals climbed across the board because of the dollar’s slump,” Zhu Yanzhong, an analyst at Jinrui Futures Co. said in an e-mailed report today.

Oil Support

Oil fell 1.2 percent to $77.05 a barrel in New York as traders sold contracts to lock in gains ahead of the Thanksgiving holiday and after the U.S. Energy Department said crude inventories at the world’s largest energy consumer rose.

“We can expect some profit-taking selling after last night’s sharp gains, led by gold and the euro,” said Ken Hasegawa, a commodity derivatives sales manager at Newedge in Tokyo. “It’s possible to go as low as $76.50 -- that’s the level before it started rising yesterday.”

Full article:

http://www.bloomberg.com/apps/news?pid=20601087&sid=a_Q3ul1dbsB8&pos=1

PS.  Too fast one way and then the other usually means an opposite reaction.  With that said, $US still in downtrend with lower highs and lower lows as gold still in uptrend setting higher highs and lows.

PSS.  How about that about 12.5% away from all time portfolio high......hopefully the gold trade sprinkled with some oil trades....along with other resources and maybe a few tech plays hold up for this 12.5%.  That would be very nice to have within next 1Q-2Q.  With that said, was down about 47% from July 2008 highs and now up about 68% from March 2009 lows.  Realistically speaking, so far, it has been just fine recovering most of the losses.  Surviving the markets to play another day sure beats trying to squeeze out that extra buck.  Albeit, I try to stay fully invested since cash makes nothing, even though the idea is that it doesn't loss you anything if not put to work.  I do not try to time the markets and allow others to try their best at it....just trying to wade thru all market conditions by overweighing and underweighing sectors.  Of which one day will not be resources, like gold and will be whatever the sector will be then.  So far, thru the volitility I still believe in resources and gold....well, for at least 1-2 years yet while trying gauge all the newsflows since we all know sentiment, momentum can turn on a dime...it all depends if it is just volitility or for good.  That decison and many other decisions and opinions is best judged by oneself and no one else since you and only you are ultimately held accountable for your actions or inactions.  Wishing every trader well.

Cheers,
Dave.