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JPY Daily News
Yen Exchange Rate Begins to Stabilize
A noticeable drop off in volatility of the Japanese yen characterized yesterday's trading. This lends to the theory that coordinated intervention by the Japanese Finance Ministry and the G7 nations has succeeded.
The 14-day Average True Range for the USD/JPY stands at 1.31, or 131 pips. Yesterday's volatility was well below that level with the pair only moving 48 pips.
The pair closed the day near its opening price 80.94. Other Japanese crosses also had relatively low volatility. Judging from the significant drop off in volatility, the intervention could be deemed a success. Speculators who were buying yen on expectations of insurers repatriating foreign currencies to Japan in order to pay insurance claims from the earthquake and tsunami may have been driven out of the market at the hand of the G7.
The Aussie dollar put in a strong performance yesterday that caps a solid 3-day run. The AUD/USD rose as the pair may have been undervalued following the disaster in that Japan which caused some market participants to slow expectations for rising interest rates by the Reserve Bank of Australia.
The AUD/USD climbed to a high of 1.0127 before closing at 1.0110. Last week the pair fell to a low at 0.9704 where bids were seen near the 200-day moving average. Resistance for the pair is located at 1.0200 followed by the all-time high of 1.0255. Support is found at 0.9940.