JPY made up ground ahead of tomorrow's Thanksgiving holidays in Japan and the US. USD/JPY fell from 117.94 in Asia and extended to the 117.20 area in the European morning. Selling was noted from CTAs and model funds encouraged by the move below 117.50 overnight. Good size Japanese bids underpinned for a time at 117.40 but the interest eventually gave way, triggering stops.
EUR/JPY traded on a similar footing, with the JPY broadly higher in the main. Speculative accounts and exporters were noted as sellers reportedly reducing positioning. Euro Group's Juncker added fuel to the move after he said the JPY move over the last few months has been rough. The market showed a muted reaction to the Japanese government monthly report. The government downgraded its assessment on the economy, which was largely inline with expectations.
A slowdown in the economy has historically seen some Japanese money repatriated and may have contributed to the JPY move. Yesterday's downward revision in the US growth forecast may also have had a knock effect given Japan's reliance on exports, the impact on the Japan and inturn JPY.
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