Currency news - Underlying yen support

Underlying yen support - 10-09-08

The Japanese yen should maintain a firm tone in the short term, although there is some tentative evidence that currency demand is starting to ease slightly.

The Japanese currency initially lost ground in European trading on Tuesday, but then found renewed support with gains to 107.10 against the dollar and 151.40 against the Euro as Wall Street was subjected to fresh selling pressure. There will be further speculation over capital repatriation back to Japan and an unwinding of carry trades which will help underpin the yen.

The domestic economic data recorded a 17% decline in the current account surplus for July while wholesale prices remained at a 27-year high, but international trends will tend to remain dominant in the near term.

The North Korean developments will be watched closely and could have a yen impact with some possible yen support if there is a change in leadership, although the volatility in global markets should be the key market influence. The Euro found further support on dips towards the 150.0 level against the yen with some technical pressure for a correction after sharp losses this month. The dollar found support below the 107.0 level on Wednesday.

Tim Clayton
Investica Ltd
E-mail: tim.clayton@investica.co.uk
+44 (0) 1452 781001

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