The 140+ point fall in the Dow Thursday unsettled the Asian markets and brought the spotlight back on risk and carry trades. Yen short covering was a feature of the overnight session although price ranges for USD/JPY were fairly tight. Asian and U.S funds were active through late Thursday and into the Friday session with EUR/JPY, AUD/JPY and other Yen crosses hit by long liquidation.
Fresh speculation over Chinese rates sent the Yuan higher, which pushed the Yen higher still. A drop to 119.44-48 brought sub-119.50 stops into play but follow through was limited and the USD bounced strongly 119.80. Offers are reportedly camped in the 120.00-20 area with exporters bringing their sell interest closer to market. Further to the topside people are hearing of Asian central bank interest to off-load in the 120.50-60 area and stops are touted tight above.
USD/JPY has a 119.40 look about it with the Yen set to seek out a further advantage ahead of the U.S. retail sales data at 12:30 GMT. Producer prices and business inventories are also due later in the session.
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