The sell-off of the Japanese yen paused today after the currency reached lows not seen in several years, but bounced and rose against some majors, including the dollar, the euro and the pound.
Today’s rally is not likely to be anything more than a small correction after the huge downfall. Nothing has changed for the currency fundamentally. The Japanese government is still keen on weakening the currency and a new Bank of Japan Governor will likely be even more aggressive that the current BoJ leader Masaaki Shirakawa (who himself is not shy of easing the monetary policy to boost growth and push the currency down).
Some of the current yen’s strength is likely coming from the uncertainty about the eurozone. The political and financial instability makes traders less willing to risk and that adds premium to safe currencies, including the yen.
USD/JPY fell from 93.62 to 93.39 as of 18:21 GMT today after touching 94.04 — the price not seen since May 2010. EUR/JPY declined from 127.15 to 126.24 following the rally to 127.67 — the strongest rate since April 2010. GBP/JPY ticked down from 146.57 to 146.24.
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