Sunday, 1 February 2015

Japanese Yen and Aussie Dollar

The Japanese currency remained steady while commodity currencies moderated as apprehensions regarding the Chinese economy affected sentiments upset by the sell off at the New York Stock Exchange.

The dollar dropped to a low of two weeks (116.64 yen). It was down from roughly 117.52 during late trading at Wall Street.

The common currency slipped to a one-week low of 132.00 Japanese yen while the Aussie dollar overcame close to a one-year low of 90.64 yen.

Traders flocked to the safe-haven Japanese note after the US economy became sluggish in the fourth quarter of 2014 and drove treasury yields to fresh lows.

Demand for the yen was propelled by a report indicated activity in China's industrial sector declined for the first time without warning in more than two years.

Weak price manufacturing index in China is expected to reinforce existing negative partiality of markets towards commodity currencies.

Investors did not see any reason to purchase the single currency so it remained only one notch higher than an 11-year slump of $1.1098 last week. It last traded at $1.1317.

The market preferred commodity considering that China is a primary market for numerous resource-exporting nations such as Australia.

An eight percent increase in oil prices did not alleviate the Canadian dollar which hovered near a six-year low of $1.2800 (Canadian) against the US currency.

Market analysts believe the RBA will join the dovish bandwagon. The central bank’s board will meet on Tuesday. It can reduce the cash rate by ¼ point to 2.25 percent or opt for easing in the forthcoming months.

Speculators built short positions on the Australian dollar which fell down to $0.7720 during the past week.

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