Forex - Yen hits 14-month high vs dollar on credit fears

The Yen had its biggest rise against the Dollar in six months in volatile trading on Thursday as investors fearing a global credit crisis exited risky trades financed by borrowing the Japanese currency. The Yen's climb was broad and steep, reaching its highest since November against the Euro and soaring against high-yielding currencies like the Australian and New Zealand dollars. Unwinding carry trades had accelerated on concerns of international credit problems.
In the last two months, the UsdJpy declined from 124.15 in late June to a 14-month low reached on Thursday around 112.00. At yesterday close, UsdJpy was 2.23% lower at 113.71. The yen was on track for its biggest daily gain versus the U.S. currency since a big shakeout in carry trades in late February. EurJpy slipped 2.23% to 152.72. Earlier the Euro had fallen as low as 150.02 Yen.
The selling in other cross-Yen pairs was active as options barriers were smashed and automatic sell orders triggered, with the AudJpy and NzdJpy falling 5.37% and 4.11%, to 90.11 and 78.49 respectively.
The Australian dollar has now lost more than 12% percent against the yen in the last six sessions at current prices, while the New Zealand dollar is down more than 13% against the Yen.
The weak data built on anxiety about slowdowns in the U.S. economy from the housing and sub-prime mortgage sectors.
The sharp increase in risk aversion followed Wednesday's plunge in share prices of Countrywide Financial Corp., the largest U.S. mortgage lender, amid rumors of the companies' credit problems.
In the wake of the new economic data, the three major U.S. stock indexes fell more than 2 percent at midday, but recovered most of the ground, with the S&P 500 Index finishing the day positive and the Dow Jones industrial average down just 0.12 percent.