USDJPY opened in Asia at 75.56 and jumped 5.2 percent after the Bank of Japan intervened in the currency markets in order to weaken the yen which was hurting exporters. Japanese finance Minister Azumi had given repeated warning recently of the possibility of intervention as the yen had been soaring against the dollar. This is the third intervention this year which caused dollar to rise to a three month high against yen, hitting 79.51 before settling into a tight range around 79.20.
EURUSD opened lower in Asia at 1.4149 and dropped over 160 pips to 1.3985 on broadly stronger US dollar after the BOJ intervention. Also euro was sold off as investors are uncertain about the upcoming G20 Summit this week on November 3-4 for another round of EU crisis resolution. Europe’s pledges for more funds from other countries are proving hard to come by as G-20 members press for more details of the debt crisis plan.
GBPUSD opened in Asia at 1.6129 and mirrored EURUSD movements, also plunging due to the BOJ intervention and broad dollar strength. Cable fell by 1 percent to 1.5963. EUR/GBP took a back seat with the focus elsewhere. It opened at 0.8766 and eased off from 0.8782 to 0.8750.EURGBP traded mixed and was trapped in a range as the focus was elsewhere in the dollar crosses. EURGBP opened Asia at 0.8769 and closed at 0.8760.
USDCHF benefited from a stronger dollar and rose 1.5 percent to 0.8738 from the open of 0.8609 to move off a seven-week low.
AUDUSD opened in Asia t 1.0705 and tumbled 200 pips to 1.0505 due to the broadly stronger US dollar after the BOJ intervention. Gold, which Australia produces, dropped 1.4 percent, weighing down the commodity-linked aussie. The dollar-denominated MSCI Asia Pacific Index fell 2.8 percent and Standard & Poor’s 500 Index futures lost 0.7 percent.
Gold prices slid 2 percent after Japan’s intervention in the currency market triggered a dollar rally causing the dollar to surge more than 1 percent against a basket of currencies. This pressures gold prices because dollar and gold have an inverse relationship since gold is priced in USD. So a stronger greenback makes dollar-denominated commodities more expensive for buyers holding other currencies. Gold opened in Asia at $1,742.79 and fell to $1,706.13.