Two large Asian sovereign sellers capped USD/JPY at 119.53 triggering a pullback to 119.27 on USD/JPY but dealers note that the fall in US stocks, with the DJIA down 80 pts, and the retreat in US bond yields have also helped cap gains. The Asian offers are still eyed above 119.50 along with option-related selling on the approach of 120.00 that will continue to hamper gains.
Dealings have settled down with the market now focused on the FOMC meeting. JPY crosses remain bid overall with the comments from the IMF that there was no need for further action to address carry trades seen offering support to the crosses. Ironically, traders note that only yesterday, in the IMF Global Financial Stability Report, the IMF warned that a volatility shock could lead to the rapid unwinding of carry trades.
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