The Japanese yen rose to its two-week high level against the euro and one-week against the Great Britain pound today as the stock markets tumbled yesterday in U.S. and continued to fall in Asia today.
Yen also continued to grow against its popular carry trade counterparts — New Zealand and Australian dollars as the traders believed that the central banks in those countries will have to decrease their interest rate. That would make AUD and NZD unattractive as the long carry trade currencies.
Bad macroeconomic report on the German retail sales also strengthened yen against the European currency as the ECB probably won’t be able to lift the interest rate further. But some analysts believe that the main reason for the current yen’s growth is behind the carry trade unwind of the long yen-based NZD and AUD positions. The major sell-off on such positions spurs demand for yen and pushes it up against such currencies as U.S. dollar and euro.
The stocks dropped globally after the former Federal Reserve Chairman Alan Greenspan said that the home prices in U.S. will probably continue to fall. Traders also expect bad employment statistics for July to be released in U.S. today.
EUR/JPY declined from 168.21 to 167.47 as of 9:09 GMT today with the daily low at 167.06 so far — the lowest level for this currency pair since July 17. GBP/JPY fell from 213.86 to 212.90, while the minimum level reached today was 212.00 — the lowest since July 25. NZD/JPY declined from 79.01 to 78.43 with the daily low at 77.86 — minimal value since March 20. AUD/JPY decreased from 101.48 to 100.71 today, reaching the 100.39 level which is lowest since July 1.
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