Dollar-yen closed in NY at Y87.78, off session lows of Y87.63 with the dollar having traded generally soft through the NY session. Rate came under fresh sell pressure into Asia, some linked the move lower to a report in the WSJ that Japanese corporates were warning of the effect a rapid depreciation in the yen would have on production costs. However, this report had been released during the NY afternoon with little effect seen. Most saw stops below Y87.50 as being targeted, the break of which took rate to extended lows of Y87.24. CTA and importer demand bought into the dip which took rate back to Y87.55. Rate eased to Y87.41 as euro-yen saw post Tokyo fix supply, but rate bounced back on reaction to FinMin Aso comments that Japan could buy ESM bonds with reserves. Dollar-yen spiked to Y87.83 but traders realised that this reaction was seen premature, ESM begins issuance 2H 2013, and using reserves would have little FX effect. Rate eased back toward Y87.40, recovered to Y87.57 before moving down to Y87.33 into the European open. Ichimoku tech analysts highlight the 5-dma at Y87.61, seen key on a closing basis, though a rising Kijun line keeps underlying tone positive.
EasyForexNews Research Team