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domenica 25 settembre 2011

Bad Week for Global Economy, Good Week for Yen

This week was marked by risk aversion sentiment that hit markets hard and sent stocks, commodities and higher-yielding currencies tumbling down. The Japanese yen thrived in such an environment. There were plenty of negative news that hurt the outlook of Forex traders and caused them to seek safety of the Japanese currency. The concerns about Greece, the downgrade of Italy’s credit rating by Standard and Poor’s, the dovish statement of the Federal Reserve were just some the bad news investors endured. By the end of the week the meeting of the Group of Twenty nations’ leaders reduced pessimism on markets a little, but that was a small relief and the outcome of the meeting isn’t certain. The yen was rising unstoppably for almost the whole week. Only on Friday the rally stalled, ended by the G-20 meeting. The weekly gains were impressive and the Japanese currency can potentially rise further in case the meeting of the world’s biggest economies’ chief wouldn’t provide any solid result (and that’s quite possible). The yen perhaps is the most attractive of the safe currencies as the US Fed constantly debase the dollar, while the Swiss National Bank managed to weaken the franc considerably by pegging it to the euro. The danger is that Japan’s central bank may also intervene to prevent any further strengthening of the yen. For now, though, the yen is a place to which traders come in search of a refuge. USD/JPY opened at 76.93, dropped to 76.09, the lowest rate since August 19, and closed at 76.59 this week. EUR/JPY closed at 103.36 after opening at 105.47 and falling during the week to 102.21, the lowest price since 2001. GBP/JPY slumped from 121.11 to 118.11 during this week and touched the record low of 116.80.

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