USD/JPY and almost all the JPY crosses traded lower as speculative accounts pared positions. Much of the JPY outflows expected today were hedged out earlier this week, which disappointed those looking for gains in the wake of Uridashi issuance. EUR/JPY languished in the 157.40-50 area and the pair slipped into 156.25 after experiencing real money selling and speculative account activity.
Coupon and redemptions today helped weigh on EUR/JPY, although there was some interest on the other side relating to fresh issuance from Italy and Germany. USD/JPY, for its part, traded from 117.40 down to 117.20 after printing a 117.10 low in Asia. Bidding from Japanese importers continued but most of it was absorbed by spec long liquidation.
Retail investor demand was evident, with reports of bids trailing down to 116.90-117.00 support. The afternoon focus shifts back to Fed policy, with Fed Chairman Bernanke due to give a testimony to the joint economic committee. The recent shift in the FOMC language raises the stakes for today's testimony, while recent sub-prime woes and equity volatility will also be gauged.
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