On Wednesday we said that due to the inverse correlation between the Japanese yen and the DJIA, the low-yielding Japanese yen could surge even higher if the DJIA broke below the recent lows and the psychologically important 8,000 level.
However, the DJIA managed to rebound more than 800 points following a test of 8,000 and ultimately ended the day up 6.67 percent at 8,835.25. As a result, the Japanese yen gave up its morning gains to plunge across the majors, finishing Thursday down roughly 3 percent against the greenback, almost 5 percent versus the euro, and a whopping 6.8 percent against the Australian dollar. Looking at the Japanese yen crosses, most of them stopped at intraday resistance, suggesting some potential for a pullback overnight. However, if the US stock markets lead to significant gains for Asian equities overnight, the yen crosses could easily break through those levels.
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