The Yen slipped lower vs the Dollar following the G-7 meeting, where it received no direct support from the group of seven officials. The Tokyo holiday may well have dampened down overall overnight trade. USD/JPY climbed to 122.10, helped in part by a sizeable buy order from a leading US investment bank.
Disappointment that there was no official support for the Japanese unit and that the concerns, recently expressed by European officials, were not discussed. However, the G-7 warning over carry trades may have sweetened the pill somewhat. Overall the market appears to be of the opinion that the Yen will remain soft. USD/JPY peaked at 122.10 early in Asia, slipped to 121.85 and then traded sideways between 121.90-122.05 until Europe nudged price down to 121.77-80.
The market is very short the Yen and with the threat of sizeable Japanese-financial year end repatriation traders will be wary of pushing USD/JPY too far. There is risk of a drop to 121.50 and possibly a return to a 121.00-121.45 trading range,seen late last week. There is talk of 121.50 option expiries today.
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