U.S. Economic Outlook boosts Investor Confidence, Leads to Yen Slippage

The Japanese Yen fell broadly versus major currencies in Tokyo trading today following stock market gains precipitated by investor unwinding and growing optimism in consumer confidence in the American economy. As reported at 12:07 p.m. (JST), The U.S. Dollar was trading steadily at 97.61 Yen on the EBS platform, well above the 95.63 Yen trade price of Tuesday, which was a 1-month low. Trading activity in Japan is quieter than usual due to their weeklong celebration of “Golden Week” which will continue through next week.

According to investors, their hope for an improved global economy was raised following the recent release of U.S. data, results of which were “mixed,” and the position that the Federal Reserve Bank is taking, all of which led to the unwinding of long yen positions. On Wednesday, the Federal Reserve Bank made a statement that the economic outlook for the United States had shown some modest improvements, and that the pace of deterioration seemed to be slowing which was why they would keep interest rates unchanged. While first quarter growth data was not as good as expected, consumer spending, accounting for 2/3 of all U.S. economic activity, was up 2.2%. One analyst commented that investor concerns over the swine flu spread also led to Yen positions being closed out.
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