Yen Beats Most Majors, Posts Weekly Gains
The Japanese yen gained this week against most major currencies as market sentiment was spoiled not only by fears of the European sovereign-debt crisis, but also by concerns that economic recovery in the United States is faltering.
The week started seemingly bad for safer currencies as a bailout for Spain lifted traders’ mood. The optimism was short-lived, though, and fears returned, especially after Moody’s Investor Service cut Spain’s credit rating. The week was bad for the USA from the fundamental point of view as a vast majority of indicators were worse than anticipated. In such an environment, it is only natural that demand for the yen returned. By the end of the week, Japan’s currency had another bullish factor: absence of quantitative easing. The Bank of Japan left its monetary policy unchanged, allowing the yen to profit from pessimism on the Forex market.
The yen was not moving in a straight line this week and Friday’s monetary policy decision of the BoJ significantly contributed to gains. Still, the Japanese currency closed higher against most majors by the end of the week. The pound was a noticeable exception as it was moving sideways versus the yen and even on Friday it managed to erase losses.
USD/JPY slid from 79.60 to 78.67 and EUR/JPY dropped from 100.62 to 99.46 this week. GBP/JPY closed at 123.62, near its opening rate of 123.46, after falling to the weekly low of 122.11.
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