JPY remains under pressure. USD/JPY did not deviate much from recent levels and remains near yesterday's high of 119.55. It basically traded between 119.23-51 with the focus elsewhere. The topside was capped by exporter offers and reports of commercial interest from sovereign names. The JPY crosses remained buoyant, helping to support USD/JPY. EUR/JPY in particular was a standout, surging to a fresh record high of 160.80/85 in Asia.
Expectations of hawkish comments from ECB's Trichet and the relative lack of concern over EUR strength on the part of the IMF and German exporters yesterday has helped EUR sentiment and pushed the cross higher. A number of traders in Tokyo cited a possible trade up to the 162.40 level, a synthetic high which equates with the DEM/JPY high of 83.10 or so seen in October "98.
The topside saw profit taking from bond related positions and the usual interest from exporters and option names. The market is largely ignoring the forthcoming G7 meeting. This should encourage continued speculative activity, with the near-term direction dependent on the performance in the high yielders.
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