Forex Asia Review – Yen drops after Japan intervenes in currency markets

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The Euro fell against the dollar in the Asian trading session. EURUSD opened at 1.4370 and slid to 1.4271. Risk aversion is growing ahead of the interest announcement later today, when the European Central Bank is expected to halt its rate hike cycle and not raise rates anymore this year, keeping them at 1.5 percent. The focus will also be on the minutes of the policy meeting to see of the bank will probably signal a readiness to buy bonds again in the secondary market.


Sterling fell against the dollar form a high of 1.6438 to 1.6363. The Bank of England policy meeting will be held later today and interest rates will be announced. The BoE is expected to keep rates unchanged at the record low 0.5 percent as recent weak economic data has indicated that the British economy is still struggling to recover.


The yen slid over 2.5 percent versus the dollar after the Bank of Japan intervened in the currency markets to curb the yen strength that was hurting the export-led economy. Japanese Finance Minister Yoshihiko Noda confirmed that an intervention had been made, adding that Japan had acted by itself and was communicating with other countries on the move. USDJPY jumped to 79.35 from 77.10. The yen also jumped against the euro, moving EURJPY to 113.29 from 110.67.


The Australian dollar fell against the U.S. greenback to its lowest level in two weeks, falling from 1.0772 to 1.0667. Recent economic data have shown signs that the Australian economy is slowing down, giving rise to speculation that the Reserve Bank of Australia will likely cut rates before the end of this year. An overall slowing global economy has affected commodity-linked currencies like the aussie.


Gold hovered near its record high and held strong with a slight incline upwards. Spot gold opened Asia at $1,660.47 and closed up at $1,664.17. The precious metal will remain supported as investors protect themselves from the consequences of the deteriorating growth outlook for the global economy and Europe’s worsening debt crisis. U.S. non-farm payroll data out on Friday could affect gold prices depending on the results.