By: Hillel Fuld
The JPY and USD decreased on Monday while the EUR and other igh-yielding currencies increased, both results of reports that Ben Bernanke was close to being confirmed for a second term as chairman of the Federal Reserve.
Resilience in Chinese shares and U.S. stock futures DJc1, after a 2 percent fall on Wall Street on Friday, also pushed investors to buy back some currencies, such as the AUD, which were heavily sold off last week.
Markets have been fluctuating since late last week due to doubts whether Bernanke would be approved for the job.
Several important senators announced their opposition to Bernanke's reappointment, which led to fear among investors already unnerved by President Barack Obama's plans to limit risk-taking by banks. But the Federal chief moved closer to winning support after the Senate's Republican leader predicted he would be appointed.
Even so, demand for riskier assets and higher-yielding currencies is likely to remain low amid rising concerns over Greece's fiscal problems, worries that China's efforts to curb its surging economy may affect global growth and worries that White House plan could impact U.S. bank profits.
"The timing (of Obama's plan) is extremely bad. It could ruin gains in share prices further, which was a core reason why the smooth global recovery was possible," said Kosuke Hanao, head of treasury product sale at HSBC in Tokyo.
"Falls in share prices, if they are extended, could dampen consumer spending and employment. The negative impact would not stop at Wall Street but could spread into the economy as a whole," Hanao said.
The USD increased by 0.3 percent to 90.06 JPY after falling as low as 89.71 yen on trading platform EBS in early Asian trade, its lowest since the end of December.
The EUR climbed 0.4 percent to 127.57 yen, off a nine-month low of 126.55 yen hit on EBS last Friday.
The AUD was trading at 81.60 JPY, right on its 100-day moving average, after hitting 80.75 on Friday, its weakest in close to a month.
Data showed that Japanese margin traders nearly doubled their overall net long positions in USD/JPY and six major cross/yen pairs on Friday, taking advantage of the gaining yen.
A big part of those increases in net long positions came after investors shed gross short positions in Aussie/yen and dollar/yen.
The retail traders also slightly increased their record net long positions in euro/yen on Friday, despite the euro's slide.
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FX BONUSES & PROMOTIONS
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Live Rates
| Symbol | Change | High | Low |
|---|
| EUR/USD | 0.0008 | 1.3283 | 1.32 |
|---|---|---|---|
| AUD/USD | 0.0059 | 1.0777 | 1.0684 |
| EUR/GBP | 0.0001 | 0.8401 | 0.8368 |
| EUR/JPY | -0.06 | 103.17 | 102.28 |
| GBP/USD | 0.0006 | 1.5826 | 1.5761 |
| USD/CAD | -0.002 | 1.0015 | 0.9975 |
| USD/CHF | -0.0005 | 0.9159 | 0.9106 |
| USD/JPY | -0.05 | 77.77 | 77.41 |
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