USD/JPY and the JPY crosses remained supported in the European session. Ongoing improvement in the Asian equity markets underscored the renewed appetite for risk, leaving JPY on a broadly softer footing. USD/JPY made a fresh attempt on the 118.51 Asian high, with European interbank names joined by short-term speculative accounts. The pair struggled around 118.45 amid an overhang of exporter offers.
This fueled some profit taking activity and the pair drifted lower, with option names entering the market around 118.30 reportedly working gamma relating activity linked to 118.00 and 118.25 strikes. The pair held above 118.00 amid importer bids and ongoing interest by Japanese investors via the JPY crosses. EUR/JPY pushed up to 155.75 and gains were made in AUD/JPY, NZD/JPY and GBP/JPY.
Offers from exporters and general commercial activity capped but the pair remained bid ahead of the US open. This weakening JPY trend is expected to continue in the near-term amid the stabilisation in the global equity markets. However, US sub-prime fears still remain a background influence and could see some choppy price swings in the medium-term.
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