Forex Asia Daily Review – JPY slumps more than 3% due to G7 backed intervention

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EUR/USD traded towards the base of a tight 1.4019/1.4037 range in early Asian trading, weighed down by a nervous reception to the Libyan no fly zone imposed by the UN. Support started at the New York low at 1.3979 and resistance at the London high at 1.4052. Comments from the Japanese Finance Minister Noda that it is possible that the ECB will intervene in the EUR/JPY have caused the cross to jump from 110.58 to 115.26, while the EUR/USD has climbed from 1.4019 to 1.4086, as the extreme volatility continues. There is now little resistance ahead of the November high at 1.4281.

USD/JPY jumped from 78.88 to 81.86 due to the G7 backed intervention from the Bank of Japan. There was good demand for USD at the fix going into a long weekend in Japan and local investors are unlikely to test the resolve of the BoJ this afternoon. History suggests that the Japanese have deep pockets for intervention when necessary and the backing of the G7 also suggests a more proactive stance in the FX markets by the authorities, so the downside looks limited short term.

AUD/USD opened the session at 0.9801 and moved as high as 0.9947 after surging on AUD/JPY demand in response to the G7 backed intervention from the Bank of Japan in the JPY, which was unexpected. Markets are illiquid and highly volatile at present, the Nikkei is up 2.66%, oil is 0.95% higher on the Libyan no fly zone and resistance on the AUD/USD starts at 0.9940, which is the Ichimoku Cloud Base.

Gold rose more than 0.5% today after equities markets regained strength and crude oil firmed on rising tensions in the Middle East and North Africa, but the nuclear crisis in Japan could cap gains. Investors shifted their attention to Libya after the United Nations authorized military strikes to restrain the leader Muammar Gaddafi, while a deadly unrest in Bahrain could stir up interest in bullion which has lost more than 2% since striking a record. The precious metal opened the session 1403.5 and moved as high as 1412.7

EURUSD USDJPY GBPUSD AUDUSD EURJPY GOLD
OPEN

(21:00 GMT)

1.4019 78.88 1.6133 0.9801 110.58 1403.5
DAY’S HIGH 1.4086 81.86 1.6189 0.9947 115.26 1412.7
DAY’S LOW 1.3979 78.81 1.6097 0.9780 110.51 1401.2
CLOSE

(06:00 GMT)

1.4065 81.71 1.6156 0.9931 114.94 1411.6