The Yen gained broadly on Wednesday morning session, as volatile global stock markets and concerns about fallout from the US sub-prime mortgage sector prompted investors to unwind carry trades. The Yen has rebounded from recent multiyear lows with the unwinding of carry trades sparked by worries that sub-prime loan problems could spill into the broader economy. Also, precious metals are being liquidated during the current wave of risk aversion; Gold fell to its lowest in 3 months of 638.90 while Silver hit a 5 months low of 12.1375. Yesterday, the Federal Reserve began a two-day monetary poli (more…)
The Dollar rose against the Euro on Thursday after the Federal Reserve, which held interest rates steady as expected, reiterated concerns about lingering price pressures in the US economy. The Fed dropped from its policy statement a description of core inflation as ?elevated?. But it also said its main concern was that inflation might fail to moderate. The FOMC statement was more hawkish than people were expecting because of the inflation aspect. Markets were pricing in greater chances of a rate cut by the end of the year given the sub-prime and housing problems. Investors had more risk appeti (more…)
The Dollar slipped against the Yen on Monday and Tuesday with investors growing nervous about more hedge fund failures related to rising US sub-prime mortgage defaults. In times of increased risk aversion, investors tend to sell high-yielding but risky assets funded by the low-yielding Yen. Japan’s Finance Minister Koji Omi comments echoed remarks by officials at Group of Seven meetings in the past year referring to carry trades and suggested some concern about the pace of the Yen’s slide. (more…)
The Dollar was lower against the Yen Tuesday after Japan’s government expressed concerns over persistent weakness in its currency, sparking fears of a sudden spike in the Yen. UsdJpy slumped to a 122.81 session’s low after Japanese Finance Minister Koji Omi warned about the risks of one-way currency bets and said the government is watching the Yen’s foreign exchange levels ?very closely?. Warning about Yen weakness by Japanese officials have been made before, but analysts noted the remarks have been made more frequently in recent weeks and are a bit stronger than before. Sterling reached as hi (more…)
