Monday, 9 Aug 2010

Yen Falls As Risk Appetite Rises

The yen slid against most of the major currencies during today's trading. The yen corrected some of its gains vs. the U.S. dollar as the USD/JPY pair gained 60 pips. The yen fell against the euro and the British pound as well.

The yen weakened today on speculations that the Federal Reserve may consider increasing its holdings of government securities and mortgage backed securities during their meeting tomorrow. Such a scenario is believed to support the recovery of the U.S. economy, which will aid global economic recovery. This has increased demand for riskier assets, and as a result has weakened the yen.

Looking ahead to tomorrow, all eyes are focused on the U.S. Federal Funds Rate statement scheduled for 18:15 GMT. Heavy volatility is likely to take place at that time, and in the case that the Fed will decide to take action, the yen might weaken further.