Safe Haven Appeal Boosts Yen, Dollar

The Japanese Yen continues to fall in the wake of this month’s election of a new government which is intent on ensuring that the Japanese economy recovers more quickly than it has done in the past. The Japanese Yen was trading just off a 20-month trough against the U.S. Dollar during the Asian trading session as the premier-elect, Shinzo Abe, stepped up pressure on the central bank to hike the inflation rate target to 2%. Japanese television reported yesterday that Abe will seek the revision of a current law which guarantees autonomy of the Bank of Japan if his demand that they reconsider the inflationary target is ignored. As reported at 12:33 p.m. (JST) in Tokyo, the USD/JPY pair was trading 0.2% higher at 84.39 Japanese Yen, not far from last Wednesday’s 20-month peak of 84.62 Yen.

The U.S. Dollar was actually trading higher against its major rivals following last week’s negotiations on the fiscal cliff stalled and quashed risk appetite. The U.S. Dollar Index which gauges the value of the greenback relative to those rivals held steady at 79.606 .DXY, just off the 2-month low struck last Wednesday when the index hit 79.008. The EUR/USD pair was trading at $1.3182, a loss of 01.% from Friday’s New York trading, edging further off Wednesday’s peak of $1.33085, the highest level in nearly 8-months.