JPY markets were in holiday trading-mode with USD/JPY and JPY crosses volatile in thin trade. The talk is Japanese investment flows into other currencies peaked yesterday around the time of the Tokyo fix and most are filled for the year. EUR/JPY saw some modest flows in late Asia/early European trade enabling the pair to record a fresh 156.45 high.
The pullback was swift, with option protection and speculative selling taking the pair down to 156.20 and then extending through 156.00/155.90 stops in the absence of decent support. The pair eventually printed a 155.61 low and then stabilised around 155.75 ahead of the North American open. USD/JPY rejected 118.50 in early Europe and hovered around 118.30 before accelerating to the downside in the wake of JPY demand.
Buyers emerged around 118.00 after recording a 117.96 low. The pair drifted around 118.15/20, with volumes and interest waning after the bout of speculative flows. The US session may get some influence from the US GDP number. Both USD/JPY and EUR/JPY are trying to retain their upward bias, yet both look vulnerable to speculative flows in thin trade.
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