New Highs in the Crosses Yet Again

The new trade week began with a quick drop of the yen right out of the gate, sending the Japanese currency to fresh eleven month low against the Euro and an almost two and a half year low against the Australian dollar. The EUR/JPY surpassed the 123.30 level and AUD/JPY saw highs over 90.00 before profit taking helped drive the pairs from their early lofty heights. The selling sent the EUR/JPY to eventual lows almost a big figure lower to 122.35 and the AUD/JPY to a 70 pip deficit near 89.30. The yen crosses have seen monumental gains over the past weeks as investors sell the Japanese yen in order to fund higher yielding investments. Speculation amongst the markets is that the Bank of Japan will be one of the last nations to hike interest rates behind the Euro Zone and the US due to the turmoil the nation has endured from the earthquake and tsunami back on March 11th. USD/JPY saw a weakening yen as well, as the pair fell from early day highs near 85.10 to trade in a range centered near 84.70 as the day wore on.

News that current Libyan leader Quaddafi would be open to a “peace roadmap” seemed instrumental in the higher risk in the early part of the day, but whatever luster that may have garnered wore thin quickly. The oil markets were lowered due to the news, with BCO/USD sliding almost a buck to 125.75 and WTI/USD softer by about 50 cents. Silver, XAG/USD saw another 31 year high as the pair flew to another fresh high; this time near $41.80 per ounce while gold hovered just off record highs near $1475.20. Looking at the majors, the opening day of the week brought a bit of choppiness with the EUR/USD, GBP/USD and AUD/USD all pretty close to unchanged after remaining in 50 pip ranges for the entire session.

Ahead, the day in Europe looks quiet on the news front, with just French and Italian Industrial Production on the docket. Any further news of a peace plan or “roadmap” could also produce a jump in risk, so that is something to keep an eye on.

Source: Forex.com

11.04.2011