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YEN under pressure across the board

Written by Sam Coxhead on April 6th, 2011.      0 comments

4:55 PM (NZT) The YEN has seen another wave of selling in the Asian timezone today. Many YEN crosses have broken through significant resistance levels. The selling looked to have been triped by large buying of the AUD/JPY cross as it broke through the 88.00 level. It also immediately pushed through to set the high of the day so far at 88.71 before setting down to current levels at 88.51. The EUR, USD , GBP and NZD also made ground in what were illiquid trading conditions.

This latest wave of selling YEN with have fundamentally be driven by interest rate differentials ahead of the various central bank meetings this week. Whilst only the ECB are expected to raise the cash rate (25pts to 1.25%- with a chance of 50pts currently priced in) the bias towards higher interest rate to guard against globally building inflationary pressures means that bias is moving more towards hiking at some stage in 2011 from the Bank of England and US Federal Reserve.

Compounding the issue for the YEN is chatter in the market that the Bank of Japan may underwrite "Earthquake Bonds" for the Japanese Govt, should this eventuate and the BoJ end up with a parcel of Bonds, they would essentially print money to do so, obviously this would be YEN negative.

NZDUSD .7716
AUDUSD 1.0367
NZDAUD .7443
AUDNZD 1.3435
NZDJPY 65.85
AUDJPY 88.50