The Yen Falls Slightly As Stocks Gain Helping The Carry Trade

Daily Forex Fundamentals | Written by Finotec Group | Dec 08 08 09:52 GMT |

The Japanese yen fell against the euro as Asian stocks rallied, giving investors confidence to increase holdings of higher-yielding assets funded in Japan's currency. The yen also slid against the Australian dollar, a favorite of so-called carry trades, after shares rose for a second day as U.S. lawmaker's neared agreement on bridge loans for General Motors Corp. and Chrysler LLC to help the automakers survive this month. The dollar fell against the euro as U.S. President- elect Barack Obama's economic stimulus plans reduced pressure on finance companies. 'The stock market is pulling the yen lower,' said Tokichi Ito, deputy general manager of foreign exchange in Tokyo at Trust & Custody Services Bank Ltd. 'Short-term loans to U.S. carmakers may provide a temporary solution to their woes.' The USD/JPY is currently trading at 93.80 as of 8:25am, GMT. President-elect Barack Obama said the U.S. recession will worsen before a recovery takes hold and that he will offer a plan to boost the economy 'equal to the task' without worrying about a short-term widening of the budget deficit. Dealing with the loss of jobs, frozen credit markets, falling home prices and other signs of economic turmoil is 'my number one priority,' Obama said on NBC's 'Meet the Press' program, which aired yesterday. Later at a Chicago news conference he said 'more aggressive steps' are needed to cope with the housing crisis. The EUR/USD is currently trading at $1.2885 as of 8:50am, GMT. The Australian and New Zealand dollars rose as stocks in the region gained amid reports U.S. lawmakers may agree to rescue automakers, spurring investors to buy high-yielding assets. 'The equity market's rebound is encouraging the Aussie up,' said Joe Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia Ltd., the nation's biggest mortgage lender. 'The reality is that the world economy is in very poor shape and that's typically bad news for the Aussie,' he said, referring to the currency by its nickname. The AUD/USD is currently trading at 0.6675 as of8:55am, GMT. Economic Calendar Time (GMT) E Event Currency Period Previous Previous Significance 23:50 GDP q/q JPY Quarterly -0.1% -0.2% ** 18:45 FOMC Member Fisher Speaks USD ** 13:15 Housing Starts CAD Nov 211.8K *** 13:00 ECB President Trichet Speaks EUR **** 09:30 PPI Input m/m GBP Nov -5.6% -3.0% *** 09:30 PPI Output m/m GBP Nov -1.0% -0.7% ** Finotec Group Inc. http://www.finotec.com/ Disclaimer: FINOTEC Tradings Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein.