Yen Selling On Rallies

Daily Forex Fundamentals | Written by Investica | Jul 25 08 10:15 GMT |

Strong interest in carry trades will lead to further yen selling pressure on rallies with volatility levels set to increase

The dollar pushed to highs of 108.0 against the yen on Thursday, but was then dragged back by renewed weakness on Wall Street. The yen recovered to 107.30 and also moved away from record lows against the Euro with a recovery back to 168.0.

Japanese underlying consumer inflation data recorded a further increase to an annual rate of 1.9% in June from 1.5% which represented a fresh 10-year high as gasoline prices continued to rise strongly. The impact should still be measured with markets not expecting the Bank of Japan to respond with higher interest rates.

Equity markets were back on the defensive on Friday following Wall Street losses while sharply increased bad-debt provisions by National Australia Bank also unsettled regional markets. These fears provided more significant yen support with the currency pushing to 106.60 against the dollar while the yen also edged stronger against the Euro before weakening again in Europe.

Investica
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