Events in Japan have continued to have a major impact on the evolution of the foreign exchange market. Many investors retreated strategically on safe haven, the yen and Swiss franc, while uncertainty remains about the nuclear accident at the plant in Fukushima.
In this context, the Swiss franc reached record highs against the greenback but especially the yen hit a high for almost sixteen years against the U.S. dollar to 80 yen per dollar. Traders are betting on massive repatriations of Japanese assets abroad to rebuild the country which is pushing up the yen.
The carry trade strategies are losing ground, the yen has also taken a lot of ground against the Australian dollar has fallen 1.5% against the yen in just one sitting. In this context, it is likely that the Bank of Japan is encouraged in the coming days to intervene directly in the foreign exchange market, which would be a first since last September.
In the euro area, the situation has deteriorated a bit but the Japanese concerns have not yet shaken the single currency. The euro has lost about 100 pips against the dollar in just one session yesterday as a result of the degradation of Portugal's sovereign rating. This degradation by Moody's has caught the markets and has significantly affected the outcome of the Portuguese bond issue yesterday. Lisbon immediately responded to this degradation as premature. Indeed, there are only two days, financial markets and the agencies still welcomed the recent steps taken by the Heads of State and Government of the eurozone to deal with financial problems of member countries. Rather paradoxical situation that recalls the crisis that sovereign remains a burden for the single European currency.
In this context, the Swiss franc reached record highs against the greenback but especially the yen hit a high for almost sixteen years against the U.S. dollar to 80 yen per dollar. Traders are betting on massive repatriations of Japanese assets abroad to rebuild the country which is pushing up the yen.
The carry trade strategies are losing ground, the yen has also taken a lot of ground against the Australian dollar has fallen 1.5% against the yen in just one sitting. In this context, it is likely that the Bank of Japan is encouraged in the coming days to intervene directly in the foreign exchange market, which would be a first since last September.
In the euro area, the situation has deteriorated a bit but the Japanese concerns have not yet shaken the single currency. The euro has lost about 100 pips against the dollar in just one session yesterday as a result of the degradation of Portugal's sovereign rating. This degradation by Moody's has caught the markets and has significantly affected the outcome of the Portuguese bond issue yesterday. Lisbon immediately responded to this degradation as premature. Indeed, there are only two days, financial markets and the agencies still welcomed the recent steps taken by the Heads of State and Government of the eurozone to deal with financial problems of member countries. Rather paradoxical situation that recalls the crisis that sovereign remains a burden for the single European currency.
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