Euro-yen saw a major reversal Monday as traders sold the euro on reaction to the Italian election results, the outcome seen as a three way split with most suggesting that the country will soon return to the polls. The vote against austerity, with its possible knock on effects into other European economies prompted a large move out of risk. The cross dropped from around Y125.20 to Y118.74 in NY before recovering to Y120.40 into the close. This recovery extended into Asia to Y121.36 before momentum faded and it drifted back around Y120.00 ahead of Europe. Dollar-yen was dragged down from Y94.14 to a low of Y90.85 before recovering to Y92.20 into the NY close. This late recovery extended to Y92.75, traders noting decent demand from two Japanese banks into the Tokyo fix. Post fix the rate drifted lower again, trading backa round Y92.00 into Europe. Importers and margin accounts were interested buyers into the dips, with Asian traders noting the Mrs Watanabe’s also showing interest. However, recovery in yen pairs was seen thwarted by Nikkei weakness, but the underlying tone remains for a softer yen.
EasyForexNews Research Team