Tuesday, 31 Aug 2010

Forex Update: Yen Continues Pushing against 15-Year High Mark

Once again the Japanese yen stretched out to reach for the 15-year high mark being tested in recent weeks. Investors shrugged off the Bank of Japan's (BOJ) latest policy easing, betting instead on more JPY gains that would test official readiness to intervene.

With mounting U.S. economic worries likely to keep investors away from riskier assets, such as stocks and high-yielding currencies, analysts are claiming that the market may push up the lower-yielding yen as safety continues being sought.

Japanese Finance Minister Yoshihiko Noda repeated on Tuesday that the government would take decisive action on currencies -- usually seen as code for intervention -- when necessary. But the reaction in the market was limited.

This morning's positive figures in Japanese Housing Starts and Average Cash Earnings has also pushed investors to buy into the yen. With little other news affecting the island economy directly, investors await news of a possible bank intervention. Until then, it appears the JPY is due to continue testing this 15-year high.