Forex Market Update: Yen Close to Hit 100 to the US Dollar
The yen traded very close to 100 a dollar mark on Monday after leaders from G20, in a recently concluded summit did not raise any argument over the Bank of Japan’s (BOJ) decision to print unprecedented amount of yen (about $ 1.2 trillion US dollar) to pull the country out of the economic stagnation.
As a result, the US dollar jumped as high as 99.90 yen, slightly short of 99.95 yen mark, hit on April 11.
At round 8:15 a.m. EST, the dollar trimmed some of its gains but still traded at 99.70 yen.
Commenting over the probability of the yen trading at 100 to the U.S. dollar, Adam Cole, global head of FX strategy at RBC Capital Markets said, “ We are 20 ticks away – it could be there in the next hour or it could be there in the next week”, according to Reuters.
Cole also added that a break of 100 could spark off stop-loss buying, which might take the dollar-yen pair to 101.45 yen, a peal level since 2009. According to Reuters, currency strategists believe that this level (101.45) could be the next short term resistance.
Lately, the yen has come under tremendous pressure after the BOJ under its new governor; Haruhiko Kuroda announced extremely aggressive monetary easing measures in order to pull out the economy from deflation. Fearing capital flight due to falling yields on Japanese bonds, investors have been consistently selling the yen.
“To make it (a break of 100) sustainable, you need to see strong evidence that Japanese investors are buying rather than selling overseas assets, or you need to see a shift in hedging behavior … But at the moment we don’t see that from capital flows data,” added Cole, according to Reuters.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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