Yen rallies as risk aversion returns
The yen rallied on Friday as risk aversion returned to global markets following several sessions of relative calm.
An overnight drop in US equity markets was followed by falls in Asian stocks. But trade was light with few investors wishing to take fresh positions in the face of uncertainty about the timing of the next rate move from the US Federal Reserve.
During most of the week, currency speculators had begun to re-enter carry trade plays, a risky strategy of trading interest rate differentials, where gains can easily be wiped out by sudden, volatile moves in prices.
Signs on Friday that volatility was returning prompted the unwinding of some of these positions, which benefited the yen, which is usually sold off to fund carry trades.
The yen rallied 0.4 per cent against the dollar to Y115.91, and fell 0.2 per cent to Y157.54 against euro.
The euro was broadly higher against most other currencies, however, after eurozone business activity remained robust in August.
The composite purchasing manager’s index, which compiles data in the region for both manufacturing and service industries, fell slightly to 57.2, from 57.5 in the previous month, but most analysts suggested the data remained strong enough to indicate a rebound in growth in the second half.
Sterling fell 0.3 per cent against the euro to £0.6782 and by 0.2 per cent to $1.3594.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
An overnight drop in US equity markets was followed by falls in Asian stocks. But trade was light with few investors wishing to take fresh positions in the face of uncertainty about the timing of the next rate move from the US Federal Reserve.
During most of the week, currency speculators had begun to re-enter carry trade plays, a risky strategy of trading interest rate differentials, where gains can easily be wiped out by sudden, volatile moves in prices.
Signs on Friday that volatility was returning prompted the unwinding of some of these positions, which benefited the yen, which is usually sold off to fund carry trades.
The yen rallied 0.4 per cent against the dollar to Y115.91, and fell 0.2 per cent to Y157.54 against euro.
The euro was broadly higher against most other currencies, however, after eurozone business activity remained robust in August.
The composite purchasing manager’s index, which compiles data in the region for both manufacturing and service industries, fell slightly to 57.2, from 57.5 in the previous month, but most analysts suggested the data remained strong enough to indicate a rebound in growth in the second half.
Sterling fell 0.3 per cent against the euro to £0.6782 and by 0.2 per cent to $1.3594.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Labels: carry trade, Yen
posted by Drs Search @ 1:45 PM
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