fundamental alert

FX Market Update: Japanese Yen (USD/JPY) Supported Above 104.00 After Early Volatility

Thursday, 18 September 2008 05:24:07 GMT  |  DailyFX Research

After late New York and early Asia currency volatility, currencies mostly consolidated with the market apparently sidelined by the pressure in regional stock markets with the Hang Seng falling over 7% today and the stock markets elsewhere generally falling 3-4% or more, as the financial crisis continues. EUR/USD which had rallied sharply in late New York consolidated between 1.4300-1.4400 to hold at 1.4340 in the afternoon. USD/JPY was capped ahead of 105.00, but remained supported well above 104.00 after BOJ price check rumors emerged out of New York. Even JPY crosses consolidated, albeit in broad choppy ranges. Oil prices were little changed in Asia, around $97 give or take a few cents but gold extended its sharp rally seen overnight to $892, only to pull back to $855 in the afternoon, despite the heavy stock sell-off. Aggressive cash liquidity adds were seen by the RBA and BOJ with increasing speculation that concerted central bank action will emerge to address the liquidity problems, with USD overnight rates rising to 6% to 8.5% today and with Japan cash rates still showing a premium. The rush to US bills and bonds continues however, with U.S. short yields dipping to zero and U.S. 2-yr yields around 1.62% in Asia. AUD/NZD fell to 1.1860 and the lowest since April as AUD continues in a downtrend while Kiwi stabilizes.

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