Several reasons in Asia and speculations in the U.S. led the yen to extend its gains versus most of the 16 main traded currencies, as pessimism news often raise demand for safer assets, being the yen one of the safest options which benefit from this phenomenon.
The yen is being traded at the highest rate in almost two months versus the euro as speculations suggest that the CIT Group Inc.’s financial situation is still deteriorating, bringing concerns back that the U.S. banking sector remains far from stabilization, attracting investors towards safety, mainly favoring the Japanese currency. Stocks also declined in Asia, mainly in Japan, indicating that expectations towards the world economic recovery have been unmet so far, as risk aversion is constantly climbing, damping demand for high-yielding assets as investors try to protect their portfolios.
Unless more solid evidences of a steady recovery start to appear in the main global economic regions, it is likely that the pattern for the yen will remain bullish, as the previous euphoria with the first positive reports after months of disastrous data start to fade. Concerns regarding the CIT Group reappeared this week after speculations that one of the most important banking conglomerates would file for bankruptcy emerged in June, rising risk aversion in foreign-exchange markets.
EUR/JPY traded at 131.82 as of 8:54 GMT from a previous rate of 133.50 in the intraday comparison. GBP/USD traded at 149.73 from 152.33.
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