The post-Trichet EUR/JPY sell off propelled EUR/JPY down to flirt with 149.00 before it sharply rebounded to 149.40. There seems to be some dispute over whether the figure actually printed, with most screens exhibiting a 149.01 low print, whereas direct sources say the 00 traded. This has raised some speculation that there was a barrier option at 149.00 - which may or may not have been KOd. The spike down was sharp, and the retreat was just as sharp, and although this morning"s USD/JPY reports were peppered with accounts of Middle East selling, they have not been noted over the past few hours.
Custodian banks report reasonable active two-way flows, with clients less interested in the currency outlook than the outlook for the underlying - DAX, Nikkei, KOSPI etc. - and that overall real money have been net buyers of Yen to invest in the indexes. They also commented that with the narrow ranges in FX markets compared to commodity markets recently, some of the more aggressive funds have been turning their attention to other markets. Overall real money likes the prospect for the Yen, but needs spot to break out of its narrow ranges of late, say below 116.00 USD/JPY, before they jump on board. EUR/JPY trades at 149.30 last.
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