Yen is heading higher today, thanks in large part to a combination of risk aversion and consolidation. After last week’s heady risk asset gains, many Forex traders are taking their profits, and re-positioning themselves for whatever comes next. The current state of affairs means that the yen is higher today, in spite of Japan’s latest budget announcement.
The Japanese government just announced an extra budget of 12 trillion yen. Up to 10 trillion of that budget will be set aside for economic stimulus. There will be more than 5 trillion yen in new bonds, and the rest is supposedly coming from money unspent during the last fiscal year.
Instead of resulting in a lower yen, weakened due to the prospect of more economic stimulus, the yen is heading higher today against its major counterparts. Yen is gaining ground today as Forex traders eschew risk assets for now. After last week’s huge risk rally, it’s time for a little sensible pull back, and the result is favoring the yen.
Going forward, though, the yen could easily see a reversal quite quickly. All the financial markets are a bit volatile right now, and that means many assets are changing quickly.
At 15:11 GMT USD/JPY is down to 87.8600 from the open at 88.1150. EUR/JPY is down to 114.8555 from the open at 115.2410. GBP/JPY is down to 141.2300 from the open at 141.6550.
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