By William Doody
The Japanese Yen gained ground against major currencies on Tuesday as a decline in U.S. consumer confidence spooked investors. The Yen was particularly strong against high-yielding, but riskier, commodity currencies in Asia. Declines in Chinese equities increased the likelihood of additional strength in the Yen moving into the second-half of the week.
The second consecutive month of declines in U.S. consumer confidence called into question economists’ forecasts for second half growth in the American economy. This was especially worrisome for investors in Asian exporters, whose profits depend heavily on retail customers in the United States. As shares in those retailers sold-off, investors moved those funds into the safe-haven of the Yen. Attention will be focused on the U.S. durable goods report due this morning and the Federal Reserve’s “Beige Book” compilation of economic data scheduled for release later in the day. Again, exporters will be particularly sensitive to the durable goods sales figures. A poor number will most likely result in further equity declines and more gains for the Yen.
We would caution traders that strength in the Yen is almost entirely a product of concern over the rate and strength of global economic growth. It is certainly not a reflection of any inherent strength in the Japanese economy, which remains stagnant. Thus, we believe that Yen-based positions should be short-term in duration and should be designed to hedge against the risk of equity losses due to poor economic data.
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FX BONUSES & PROMOTIONS
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Live Rates
| Symbol | Change | High | Low |
|---|
| EUR/USD | 0.0002 | 1.3283 | 1.32 |
|---|---|---|---|
| AUD/USD | 0.0055 | 1.0777 | 1.0684 |
| EUR/GBP | -0.0001 | 0.8401 | 0.8368 |
| EUR/JPY | -0.11 | 103.17 | 102.28 |
| GBP/USD | 0.0002 | 1.5826 | 1.5761 |
| USD/CAD | -0.0018 | 1.0015 | 0.9975 |
| USD/CHF | -0.0001 | 0.9159 | 0.9106 |
| USD/JPY | -0.06 | 77.77 | 77.41 |
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