Wednesday August 3, 2005 - 10:12:33 GMT
Share This Story
INVESTICA Ltd - www.investica.co.uk
Yen to target 110.0
After a recovery back to 111.9, the dollar weakened back to 111.3. There is the possibility that there will be a more aggressive covering of short yen positions which could strengthen the Japanese currency sharply, especially if the dollar loses support at the 111.0 level.
There is greater fundamental optimism over the Japanese economy which will offer some background support to the Japanese currency. The Nikkei index remained firm on Wednesday with an increase to a 15-month high before a slight retreat. The optimism over the economy is reflected in a rise in 10-year bond yields to a 4-month high.
Bank of Japan Governor Fukui reported that prices could start to rise from late this year which will maintain speculation over a monetary tightening and the Bank of Japan will let the level of deposits in the banking system fall below the JPY30-35trn target. Overall yield considerations will still lessen the potential for short-term yen gains given that US yields are above 4.4% while Japanese yields are 1.35%.
There will still be caution ahead of the postal reform vote in the Upper House which is scheduled to take place on Friday, although this could be delayed until next week. Concerns that the government could lose the vote will limit the potential for near-term yen buying. Reform approval could offer significant yen support, especially as the yen tends to be strong during August.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."