Wednesday, 13 Apr 2011

Yen Weakens On Increased Risk-Appetite

The Japanese Yen fell against most of its major currency counterparts on Wednesday on a rising risk-taking in the market. The Japanese currency fell in response to global equity market gains.

The Yen weakened today after appreciating for four straight days, in light of the concerns regarding the euro-zone debt crisis and the ongoing nuclear crisis in Japan, which has boosted demand for the Yen as a safe-haven.

The EUR/JPY fell about 120 pips from a daily high of 122.15, and is currently trading near the 120.90 level. The Yen also dropped around 100 pips against the British pound resulting in the GBP/JPY cross reaching as low as the 136.00 level.

In addition, U.S. President Obama has presented its plan today to reduce the nation's long-term debt, with expectations to cut $4 trillion in cumulative deficits within 12 years. Due to this notion, risk appetite in the market was well supported.

Looking ahead to tomorrow, the most significant economic release looks to be the U.S. weekly Unemployment Claims. Analysts are forecasting that the U.S. labor market continued to improve during the past week. In this case, the trend of higher risk-taking is likely to proceed and further weaken the Yen.