Yen Drops as Japan Intervenes - 31.10.2011
US Dollar
The dollar strengthened against all its major counterparts on Monday, covering partly last week’s losses, which were caused primarily by declining risk aversion among investors encouraged by the adoption of the complex anti crisis program in Europe. In the US the Federal Open Market Committee is scheduled to have the next meeting on November 2. Recently Fed Vice Chairman Janet Yellen, Governor Daniel Tarullo and Federal Reserve Bank of New York President William Dudley expressed opinions that additional stimulus measures by the central bank may be needed as the growth remains weak and unemployment elevated. This week the data may show as well that non farm payrolls increased by 95000 jobs in October after a 103000 increase in September, leaving the unemployment rate at 9.1%. The Dollar Index, which tracks the US currency against six currencies of the main US trading partners, jumped today to 76.26 from 74.90 on Friday.
Euro
The single currency dropped today against the dollar to 1.40 by the end of Asian trading hours from a local high 1.4246 reached on Thursday. The European Central Bank will hold interest rate policy meetings on Thursday as well, with data today forecast to show inflation eased in October. CPI index estimation is expected to decrease from 3% to 2.9%, while the central bank is expected to leave the interest rate at 1.5%. The euro lost almost 200 points against the dollar during the Asian trading session, but strengthened considerably against the yen from 107.00 to 111.60.
Japanese Yen
The yen dropped from a record high against the dollar after Japan intervened in the currency market to prevent further strengthening of the nation’s currency which hurts exports. Japanese Finance Minister Jun Azumi said today the government took unilateral steps to weaken the yen, which strengthened even as stocks rallied globally this month on optimism that Europe will contain its debt crisis, informed Bloomberg. “I’ve repeatedly said that we’ll take bold action against speculative moves in the market,” Azumi said after the government acted and added “I’ll continue to intervene until I am satisfied.” The greenback rocketed against the yen from 75.57 to 79.50 by the end of the session.
Australian Dollar
The Aussie fell as well against the US counterpart amid expectation the central bank may lower the policy interest rate by a quarter percentage point as soon as tomorrow. The rate is currently at the developed world’s high – 4.75%. Last week the data showed that Australia’s consumer prices rose in the third quarter by 0.6%, following a 0.9% gain in the second one, decreasing somewhat the inflationary pressure and leaving space for monetary policy tools to support the economy. This morning the Australian dollar fell from 1.0696 to 1.0506 against the greenback.
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