EUR/JPY traded on a supportive footing amid increased interest for high yielding currencies. EUR/JPY saw interest of its own, yet larger flows have been seen elsewhere, with NZD/JPY, AUD/JPY and GBP/JPY all seeing interest. Eastern European activity was seen in GBP/JPY and Japanese activity has been heavy via NZD/JPY and AUD/JPY.
EUR/JPY price action was restricted towards 157.00, with exporters and option names reportedly sitting on the offer between 157.00 and 157.25. USD/JPY drifted back towards the 118.00 handle as European players were encouraged by the broad JPY selling that went through in the Asia. Japanese demand has been prevalent, with custodial names and retail investors active. Exporter offers and option related activity capped gains, along with light selling in the JPY crosses ahead of the US open.
Focus will remain on yield into the US session, particularly with the global equity markets stabilising and BOJ Governor Fukui indicating low interest rates ahead. The US session movement may be clipped ahead of tomorrow's US FOMC announcement, with focus on possible rhetoric on the sub-prime situation.
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