Deflation pressures remains a concern for Japan based on decline in consumer prices and the yen’s 8 percent climb in the past nine months which are forcing policy makers to remain open to further stimulus. Despite Japans massive debt load of 973 Trillion yen (a ratio of 200% to GDP compared to the US 90%) traders are still driving Yen crosses lower on risk aversion fears.
The single currency Euro struck a fresh 9-month trough versus the Japanese Yen, and a 6-month low against the U.S. Dollar on continuing investor worries over the worsening fiscal situation in Greece.
The U.S. Dollar stepped back off a 6-month peak versus the single currency Euro following U.S. President Barack Obama’s State of the Union Address last night in Washington.
Reports of central bank buying interest lined up at 1.4040 down to 1.4000. Stops below 1.4030 with option protection at 1.4000 and more stops below. Good bids again at 1.3970 and stops below 1.3950 on the EUR/USD. The higher CPI data from Australia helped propel the AUD/USD to a high of .9045, majority of retail traders are already long on this pair.
The trend of risk aversion continues in Asian trading today, with investors opting instead for the safe-haven Japanese Yen, which saw broad gains. As reported at 1:24 p.m. (JST) in Tokyo, the Japanese Yen rose .5% versus the U.S. Dollar, to trade at 89.15 Yen, the highest level in nearly 6 weeks.
The Japanese Yen surged broadly in Asian trading today following the news that Chinese authorities ordered the implementation of recently established capital reserve requirements for some Chinese banks, an indication that China is making some effort to control its booming economy and stave off inflation. Not all Chinese banks were required to raise their reserve; the specifically chosen banks all bore the same characteristic excessive lending policies.
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.
In Asian trading today, the U.S. Dollar edged up versus the Japanese Yen after the release of the news by a White House representative that Ben Bernanke, the Chairman of the U.S. Federal Reserve Banking system, is set for reappointment to a second term of office.
Next week trader's attention will be focused on Ben Bernanke's confirmation, US GDP, and the FOMC. If Ben is unable to get confirmed for another term as Chairman of the Federal Reserve Board, I expect the news to be dollar bearish. Primarily because of the uncertainty that would ensue from such a result. Coupled with Obama's new bank regulation proposals, and a floundering economic recovery, the US dollar will give back some of the gains. The US GDP is expected to have grown by 4.5% last quarter, this may seem a bit optimistic but retail sales did increase in the last three months, and the trade deficit declined.
The Japanese Yen rose to a new 9-month peak against the Euro, which continues to struggle on investor concerns over the fiscal health of many of the Euro-zone nations. As reported at 12:04 p.m. (JST) in Tokyo, the Euro traded at 127.26 Yen, a decline of .1%, though at one point it had traded at 126.55 Yen, the lowest price since April 2009. The Japanese Yen also moved up versus the U.S. Dollar, trading at a 5-week high of 89.85 Yen.
The U.S. Dollar touched a new 5-month peak versus the single currency Euro in London trading today as continued investor concerns over the debt problems in Greece and other Euro-zone countries weighed heavily on the currency. The fiscal well-being of some European countries, e.g. Spain, Greece and Portugal, spurred investors to sell off their Euro-zone government bonds in favor of German-issued paper.
The dollar has strengthened across the board in volatility trading over the last few days. Clearly the dollar bulls are in control of the market now. The EUR/CHF is effectively unchanged from where North America closed out Wednesday. Talk of buy orders down at 1.4700/10. I believe that there will be some intervention if it falls below 1.4700.
The U.S. Dollar rose broadly in early London trading today, helped by a drop in commodity-linked currencies on the rumor that lending institutions in China may have been advised to curb their lending activities, which would effectively slow the fast pace of the Chinese economic recovery.
The EUR hit a four month low after a sharp decrease coming as a result of concern over Greece's fiscal problems. The fall also occurred in response to the currency falling below a key chart level that might signal a bearish trend.
The Pound Sterling touched on a new 6-week peak versus the U.S. Dollar and a 4-month peak against the single currency Euro in Asian trading today. As reported at 1:49 p.m. (JST) in Tokyo, against the U.S. Dollar the British Pound traded at a new high of $1.6422, and versus the Euro, the Pound edged up .5% to trade at 87.67 Pence. The U.K. currency benefited from the recent news that British-based Cadbury Plc and U.S.-based Kraft Foods intend to create the largest confectionary firm in the world; to that end, a $19 billion deal is currently under negotiation.