Earlier, the Japanese yen weakened a bit on expectations that next week’s GDP data will indicate more contraction for Japan’s economy. That momentary weakness has pretty much evaporated, though, as risk aversion sends Forex traders looking for safe haven.
Yen is gaining against its major counterparts today, heading higher as concerns about the “fiscal cliff” in the United States send fear throughout world markets. Forex traders are looking for safe haven, and that means the Japanese yen is heading higher. Despite the expectations for a slowing economy in Japan, the yen is still considered a stable currency, and one that is safe.
With everyone looking toward the fiscal cliff now that the presidential election is over, it is little surprise that there has been a rush for safety. The yen is back in demand, and even the Bank of Japan and its quantitative easing program can’t change that for now. Until some good news emerges, and until the fiscal cliff issue is resolved, risk aversion is likely to be a major player in the currency market — as well as in other world markets.
At 13:41 GMT USD/JPY is down to 79.2400 from the open at 79.7425. EUR/JPY is down to 100.6030 from the open at 101.3250. GBP/JPY is also lower, down to 126.1195 from the open at 127.0450.
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