Forex Asia Review – USDJPY hits nine-month high

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USDJPY gapped higher early in Asian trading to hit a nine-month high of 81.65 before easing back to previous levels due to profit-taking. The Japanese currency has been weakening in recent weeks following policy easing by the Bank of Japan and a drop in Japan’s current account surplus. The euro climbed to 109.94, the highest since October 31 before ceding gains to fall to 108.84 yen.

 

EURUSD hit an early high of 1.3478 its highest levels since December 2 last year. The euro has made sharp gains since the end of last week due to optimism of upcoming European Central Bank LTRO operation. This long term financing operation will allow banks to have access to cheaper borrowing and thus avert a credit crunch. EURUSD then eased back down to 1.3430.

 

Markets in Asia were subdued with a lack of significant economic data today and are taking a pause after big rallies last Friday. Meanwhile the G-20 meeting held over the weekend in Mexico did not provide any important news that would shift markets. The meeting wrapped up with finance ministers and central bankers postponing any decision to hammer out a global bailout package for Europe’s debt crisis.

 

The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 78.419 from about 78.398.

GBPUSD peaked at 1.5900 before easing, following the general subdued tone of the markets.

USDCHF saw a small bounce 0.8964 from 0.8934 following the plunge on Friday. EUR/CHF was unmoved, holding between 1.2040-55.

 

AUDUSD hit an early high of 1.0714, before slipping to 1.0657, weighed by profit taking. The pair was kept supported by news that Prime Minster Julia Gillard won the leadership vote and will retain her position.