Yen Fluctuates Wildly amid Libya Turmoil, Rating Agency Action
The Japanese Yen is fluctuating wildly as multiple crosscurrents impact the currency. Initially the Yen fell sharply after the U.S. State Department issued a statement on the developments in Libya. Secretary of State Hilary Clinton said that “the world is watching the situation in Libya with alarm.” Markets were already on edge amid scenes of chaos in the North African nation, but the statement seemed to have trigged a kneejerk reaction in Yen currency pairs, sending USD/JPY as high as 83.54 before those gains were wiped out minutes later. Thin liquidity between the end of the U.S. session and the start of the Asia session also contributed to the move.
Only two hours later, rating agency Moody’s changed the rating outlook on Japan’s Aa2-rated government bonds to negative from stable, sending the Yen back to the downside. USD/JPY spiked as high as 83.20 on the news. But once again, sellers pushed the pair back down. In fact, the Yen is currently the only currency rising against the U.S. Dollar, indicating that safe haven considerations are outweighing the action from Moody’s.
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