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Japanese yen is gaining in the Asian session, after another record-breaking plunge on Wall Street and the Nikkei’s 21-year record 10.4% fall sent market participants running for safe haven currencies.
“In FX markets, the equity market sell-off has seen cross/yen trade heavy overnight on risk aversion. The high yielding currencies sold in favour of the safe-haven [...]
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Published on October 13, 2008 by Forex
U.S. dollar has been making broad-based gains on Friday morning, especially against the Canadian dollar, which has melted despite a blockbuster Canadian employment report.
The U.S. dollar is up 0.0274 to 1.1774 against the Canadian dollar even after the Canadian economy was reported to have created 106,900 new jobs in September, more than 10 times the consensus estimate of analysts. Aiding the decline was an announcement shortly after the data’s 7 a.m. EDT release by Canadian Finance Minister Jim Flaherty that the Canadian government will purchase up to $25 billion in high quality, insured mortgages.
“USD/CAD remains dominated by a broad structural demand for USD, and a rapidly deteriorating global economic outlook. CAD avoided the worst of carry trade unwinding and the shedding of risk, but it cannot avoid the increased risk of a sharp global slowdown / contraction,” wrote RBC Capital Markets senior currency strategist David Watt.
Regarding the unwinding carry trade, the Australian dollar is down 0.0234 to 0.6607 against the greenback. On July 15, the AUD/USD was as high as 0.9849. CMC Markets chief FX strategist Ashraf Laidi commented on the currently inverse relationship the Australian dollar has with safe-haven gold (up $15.20 per ounce to $901.70).
“The complete break in the once positive correlation between gold aday’s conditions are characterized by reduced risk appetite, money flowing the Aussie owes to the escalation in the unwinding of carry trades at the expense of high yielding currencies, which coincided with a refuge to the safe haven metal,” he said.
“Thus, unlike in past conditions of strengthening economic fundamentals when rising gold moved in tandem with the metal-dependent Aussie, to out of high yielding currencies to the benefit of safe haven yen, Swiss franc and gold,” he wrote.
The U.S. dollar is down 0.84 to 98.97 against the Japanese yen.
Published on October 10, 2008 by Forex
Japanese yen is firm against majors today after Wall Street plummeted just before the North American close and the Nikkei followed suit, falling by 11% in early Asian trading.
Patricia Gacis, strategist with ANZ Markets said, “The JPY is surging again on risk aversion in line with the slide in stock markets. USD/JPY is back below JPY100 and JPY crosses are down.”
Prior to the Asian open, the Bank of Japan released their minutes from their Sept. 16-17 and Sept. 18 meeting.
It was revealed Bank of Japan members foresaw the coming deterioration in global financial markets. One member of the bank said the current market turmoil could eventually affect Japanese banks, and all agreed attention must be paid to risk and the potential harm from market uncertainties.
The Bank of Japan also released slightly lower-than-expected M2 and M3 money supply stocks for September, and a bank lending report which revealed bank lending has levelled off slightly.
With no significant releases out of Japan, next Monday will surely see Asian markets watching news out of the G7 meeting of world finance ministers and central bank leaders in Washington over the weekend. Strategists at Brown Brothers Harriman said rumours are circulating that a blanket guarantee on inter-bank lending will be made.
The U.S. dollar was down 0.85 to 98.96 against the yen.
