It’s probably not surprising to most Forex traders that the Japanese yen is higher today, thanks to all the uncertainty in the financial markets — and the uncertainty for the economy.
Risk aversion is high today as concerns about the future of regional economies, and the global economy, dominate the markets. As a result, Forex traders are looking for safe havens, and the Japanese yen is near the top of the list when investors want a stable currency.
In the US, concerns about earnings, especially in the financial sector, have been sparked by Goldman Sachs. However, US markets are struggling toward the black, nonetheless, thanks to better Coke profits and the fact that Bank of America is finally turning a profit.
This news is cold comfort, though, in the wake of the devastation in the eurozone and in Britain. In the eurozone, leaders are once again falling flat on a solution to contain sovereign debt. Plus, France is on the verge of a credit downgrade. The more dramatic have begun, again, predicting the end of the euro. In Britain, stagflation fears are rising, undercutting the sterling in forex trading.
For now, the Japanese yen will just have to put up with strength. Japanese leaders like to intervene to keep the yen weak, but with the global climate, it might just be time to roll with it for a while.
At 15:20 GMT, USD/JPY is lower, down to 76.76, from the open at 76.82. EUR/JPY is down to 105.06 from 105.54. GBP/JPY is also lower, falling to 120.05 from 120.97.
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