Monday June 4, 2007 - 10:19:03 GMT
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INVESTICA Ltd - www.investica.co.uk
Risk appetite undermines yen
Risk appetite will undermine the yen initially, but there is a high risk of market complacency.
The yen remained under pressure over the remainder of Friday with the dollar drifting above 122.0 while the Euro pushed to 164.20. The yen was slightly weaker than 122.0 against the dollar in Asian trading on Monday, although there was some support close to this level. The trade-weighted index fell to a 22-year low as interest in high-yield currencies persisted.
There is still strong interest in global carry trades as high-yield currencies advance on optimism over global growth. The persistent interest in carry trades will undermine the yen in the short term. The Japanese currency also failed to gain any significant benefit from a sharp drop in Chinese equity prices. The Japanese economic data suggested firm capital spending data and confidence in the economy should remain firm.
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