The Japanese currency rose from the local bottom levels against all other major currencies today after the stock markets fell yesterday and the outlook for todays sessions remain bearish.
The rally of the high-interest currencies was supported mainly by the growth in the developed and emerging stock markets that was clearly visible during the last two weeks. As the optimism of the investors vanishes and the technical analysis theories suggest a correction, the low-yielding currencies, such as yen, begin to rise on the Forex market.
The decision by the Bank of Japan to leave the interest rate unchanged at 0.1 percent today wasnt a surprise to the market participants. But the lack of announcement of the quantitative easement definitely improved the attractiveness of the Japanese currency.
The traders simply believe that more losses are yet to be reported by the financial institutions throughout the world and that the available anti-criss measures wont make those losses look too small to be neglected. Such currencies as the euro have little chance against the Japanese yen in these conditions. However, analysts suggest great care with entering the long positions on the yen as the period of the global decline might not last longer than a week.
USD/JPY fell from 101.05 to 100.39 as of 9:32 GMT today after reaching as high as 101.43 yesterday — the highest level since October 21st 2008. EUR/JPY declined from 135.42 to 134.00, while GBP/USD dropped from 1.4745 to 1.4725 today.
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