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Japanese Yen Retreats from 4-Month High on Intervention Fears
The Japanese yen surged again in pre-Tokyo morning, hit a fresh 4-month high of 78.48 against the greenback on stop-loss selling after the break of 79.00, however, the yen quickly retreated from highs versus other currencies in part due to rumors that Japanese officials may intervene the forex market to stem yen’s strength. Comments from Japanese top officials were seen supporting the yen, Economic Minister Kaoru Yosano said today that Japan’s economy will show bright signs from autumn this year towards next year, He also warned that Europe’s sovereign debt problem is worsening to an alarming degree. Bank of Japan Governor Masaaki Shirakawa also gave upbeat remarks by saying Japan’s economy is recovering on a better supply conditions, production activities are picking up with rising exports.
However, trading below the level of 79.00 proved to be short-lived as traders were getting nervous at such a level where the USD/JPY was last traded in mid-March and MOF had intervene along with other central banks to selling the yen. Finance Minister Yoshihiko Noda did say that recent moves in yen have been a bit one-sided. The pair quickly rebound from 78.48 to above 79.50. Option barriers at 79.00 and 78.50 were taken out before Tokyo opening, bids from Japanese importers and investors are tipped at 79.00 and more at 78.40-50 with next barrier seen at 78.00, on the upside, offers are reported at 79.80 with stops building up above 80.00.
The single currency finally stabilized in Asia, partly helped by the release of stronger-than-expected Chinese economic growth and industrial output data which encouraged fresh risk appetite demand, Falling of Italian and Spanish bond yields from 14-year highs was also seen easing selling pressure on the single currency. Having said that, people are expecting the euro may come under pressure again later as Europe’s sovereign debt crisis problem remains, Moody’s Investors Service cut Ireland’s credit rating to junk status (Ba1 from Baa3). Offers from various parties remain from 1.4020 up to 1.4050 whilst bids are tipped from 1.3970 down to 1.3950 with stops building up below 1.3900 and obviously below yesterday’s 5-month low of 1.3838.
The greenback also has problem on its own as the minutes of the Fed's June meeting showed some committee members believe further stimulus is needed should the conditions deteriorate further, which gave hope to investors of a possible QE3. Fed also expressed concerns over the debt ceiling of U.S. and eurozone debt crisis as risks to U.S. economy.
On the data front, UK job data will be released at 08:30GMT and eurozone industrial production data is scheduled at 09:00GMT, however, the focus will be on Fed Chairman Ben Bernanke semi-annual testimony to House at 14:00GMT.
Market Overview | Written by ActionForex.com | Jul 13 11 06:58 GMT
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