JPY gained in nervous European trade. Focus remained on the global equity markets. There was a calmer tone but tentative gains petered out and European stocks ended the morning in negative territory adding weight to the risk reduction theme. USD/JPY and the crosses again saw good buying interest from Japanese players during the course of Asia, which fueled an early European run higher.
EUR/JPY topped out at 155.10 and USD/JPY was unable to overcome offers from 117.80 on behalf of exporters and speculative accounts. Heavy losses in NZD/JPY and good interest via GBP/JPY also influenced price action. EUR/JPY cleared 154.50 bids and triggered stops below and USD/JPY filled in Japanese bids at 117.50 and 117.40 to end the European morning, with focus on the 117.00 area. The afternoon session will trade directly off US stock market movement.
A thin data schedule may increase risk reduction, with sub-prime lenders still a focus and risk premiums up across the board. In this environment risky asset class/trades will be pared back. Large USD/JPY stops at 116.90 will be pivotal going forward given yesterday's BOJ rate checking rumours.
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