The Japanese yen continued its fall against the high yielding currencies today, especially against a very strong bullish euro, and reached 3-month minimum value against it, as the stock market rallies spurred carry trade popularity on Forex.
The U.S. dollar is heading for the fastest weekly gain in more than four years versus the Japanese yen as the financial markets get a feeling of relief from the crisis.
According to the new research note by Richard Grace from the Commonwealth Bank of Australia, it would be better to buy Australian dollar with euro in 2008 to earn from the interest rates difference.
The Great Britain pound today reached its lowest value against the Japanese yen since 11th of July, 2006, continuing the strong bearish trend that has started during early November 2007.
New Zealand dollar is showing a high level breaking growth today against the U.S. dollar after the confidence in the carry trade and other high-risk investments rose on the Fed’s rate cut expectations.
Tokyo based massive sale of the Japanese yen spurred the daily drawdown of this Asian currency. Residents preferred to sell the yen opting for the riskier but higher yielding currencies, such as euro, Australian and New Zealand dollar and South african rand (so called carry trade investing).
Aussie was on a rising edge today on the better investors sentiments, spurred by the recent stock markets growth. Australian dollar gained against both dollar and Japanese yen - its main carry trade counterparts.
Australian dollar gained against other currencies - about 1% against U.S. dollar and more than 1.1% against Japanese yen, yesterday after U.S. President George W. Bush stated that government will act to prevent the further damage from the mortgage financing crisis and to help those already hurt by the crisis consequences.
While the Japanese yen is surely a benefiting currency when it comes to the carry trade panic, some currencies feel extremely bearish at the times of global financial instability and other factors that bring down risk appetites. New Zealand dollar is one such currency.
Yen continued its fall today while the high-yielding currencies like Australian dollar, Great Britain pound and other currencies were sold for Japanese yen to secure the risks connected with carry trading.