The carry trades direction is the key driver of the market since the beginning of this week. The yen rallied across the board as investors unwound short yen carry trades. Beside, a report released last night showed Japanese corporate service price increased more than expected, pushing the currency higher further.
Japanese Finance Minister Koji Omi yesterday warned investors of the risk of one-way bet on the yen exchange rate. A round of carry trades liquidation surged since this week, bringing the yen away from the lows against most high-yielding currencies. The yen on Wednesday posted a third straight daily gain.
USDJPY encounters interim resistance at 122.80, backed by 123 and 123.30. Subsequent ceilings will emerge at 123.50, followed by 123.80 and 124. On the downside, support begins at 122.30 and 122, followed by 121.80. Additional floors are eyed at 121.50, backed by 121.30 and 121.
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