FX Daily Wrap Up

A rather light day of trading in the majors after this past weekend’s G-7 meeting in Germany. Many traders were expecting a bit of a boost in the forex markets – particularly the Yen – based on the hawkish comments from many of the Finance Ministers and World Bank Presidents. Both European and Japanese delegates warned traders against “one-way bets,” a clear allusion to the “carry trade” investment model – the practice of borrowing in a low-yield currency to invest in higher-yielding one. The European Finance Ministers went a step further with a carefully-worded speech indicating that the Yen may fall too far below the Euro, threatening to seriously dent European exports. After a brief push up to the 122.10 level, there was not enough support to be found and the multi-day high fell back to 121.75 for the majority of the day. Even without the Yen’s weakness officially on the agenda, there was nevertheless quite a bit of speculation that pressure would be placed on Japan to raise the price of the Yen. Across the big pond, the US Dollar gained an impressive 65 pips against the Euro. This decline in the pair was seen in early morning trading, following a brief touch of the day’s high of 1.3035. As we head into the evening sessions, the USD/JYP is at 121.85, and the EUR/USD is at 1.2959. David Hilgeman, XPRESSTRADE Analyst