Global risk reduction fueled broad JPY gains. A constellation of events was the trigger for heavy JPY gains. Comments on carry trades from IMF's head Rato and Eurogroup's Juncker were flagged, although they deviated little from the recent theme. These added to the general tone, along with the recent US-sub prime weakness and the geopolitical risk associated with Iran.
High yielding currencies were sold off as a consequence and heavy fund demand was noted for JPY across the board. USD/JPY made a push on 120.00 and broke through stops to record an eventual low of 119.29. Heavy US name selling was noted, along with good investment house interest out of Europe. Bids at 119.70 and 119.50 were filled with ease and it took a very good name ahead of a large 119.25 option position to stabilise price action.
EUR/JPY was equally soft and printed a low of 157.64 from a 159.26 Asian high. AUD/JPY and NZD/JPY also moved lower as did GBP/JPY, reinforcing the talk that some de-leveraging was under way on rising risk premiums. Focus turns to US durable goods and consumer confidence. Analysts look for a further deterioration in US data.
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