New record lows for the Japanese unit vs the EUR and continued weakness vs the Dollar as the high yield markets move further ahead. With no undue concern from the weekend meeting of G8 finance ministers the market has felt comfortable in pushing the more risky currencies higher at a cost to the Yen.
The China factor proved to have a fleeting impact on the market with the three pronged policy tightening leading to calmer rather than volatile price action in the Asian region. The fact that Asian and Western stock markets absorbed the China rate news so well does not bode well for the Yen, which will continue to be used as a funding vehicle for the carry trade. USD/JPY has also drawn support from strong importer Dollar demand as the month draws near to its close.
The bids reportedly run from 121.10 down through 120.70. On the offer side the 121.50 option barriers have gone and 121.60 highs recorded. Exporter offers are reportedly mixed in with stops above 121.65. Into London midday and Dollar demand took over from carry trade demand and EUR/JPY consequently followed EUR/USD lower. The cross falling from 163.94 to 163.41.
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