Yen Ends a Rough Week.

The Japanese Yen continued its week long slide here in Asia, falling to levels not seen since mid February against the US Dollar as continued talk about the new carry trade seem to come to fruition. USD/JPY saw a full big figure gain from early New York trading, the last 60 or so pips to 83.70 highs produced in Asia. As hawkish toned comments continue to fly from Federal Reserve members, the picture seems clearer that the US may certainly begin hiking rates long before Japan is able to get back on its feet. This disparity has fueled yen selling while the gap between Japanese and US two year bond yields has almost doubled to 63 basis points over the past few weeks. This phenomenon entices many investors to sell the low yielding Japanese unit in order to fund investments in higher yielding assets and currencies.

With the selling of yen in full swing, Asia saw the EUR/JPY advance to fresh ten month highs over 118.30. The AUD/JPY pair also saw fresh ten month highs as it grew 80 pips on the day to highs just short of 86.70. The situation was similar in the other yen crosses, with CAD/JPY seeing an advance to 86.30, a level not touched in this pair since mid July of 2010. Japanese Tankan data showed encouraging results coming in on target at 6 while non-manufacturing tankan results were a firmer 3, better than the forecast of 2. This data probably showed no repercussions of the recent earthquake and tsunami on March 11th however.

Across the majors the tone was a bit more muted with US Non Farm Payroll Employment data due up later in the day. The EUR/USD and GBP/USD movement was mostly sideways, with a bit of strength resulting from the firmer yen crosses. The AUD/USD did seem a bit jumpier however, seeing a 40 pip jump to 1.0350 late in the day. Earlier in the day, the pair once again saw fresh 29 year highs over 1.0370.

As mentioned earlier, later in the day we have the usual first Friday of the month festivities that we call US NFP data. The data is expected to show 191K jobs gained as well as an unemployment rate of 8.9%. It should be known going into this data that it is extremely volatile and will probably cause fluctuations in currencies. Have a great weekend…

Источник: Forex.com

01.04.2011