FX update: Sliding equities buoy JPY
First Published Thursday, 9 July 2009 from Need to Know News
JPY consolidated after strong overnight gains.
Broad equity markets losses triggered a pick up in risk aversion and forced a widespread move out of the JPY crosses, which forced USD/JPY sharply lower. The dollar pairing traded as low as 96.08 and EUR/JPY hit 132.72 lows in Asia before it rebounded to 133.50 in early Europe.
A Swiss house was a large buyer at the lows and an Eastern European presence was noted in EUR/USD following comments from a Kremlin aide on a global reserve currency.
The Japanese market saw little impetus from the BoJ, which left its key rate unchanged at 0.10% and raised its assessment on the economy, which was widely expected. The global economic recovery story will remain the leading influence.
It looks as if yesterday's US numbers and some negative press surrounding Europe has taken the edge of the reflation trade and the market will remain sensitive to today's releases, with German ZEW due and a slew of US economic releases to digest.
USD/JPY should remain capped towards 96.70-80 and over 97.00, while downside support is tipped at 96.00-10, which are protecting stops below.
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