Dollar-yen gained a late NY session boost as traders reacted to a Nikkei news release stating that the BOJ and Japan govt had released a draft accord on a 2.0% inflation target. This triggered a fresh round of demand that broke rate out of its lethargic Y87.98-88.34 range, triggering stops through the Y88.50 barrier that took it to a high of Y88.70 high into the close. Buying continued into Asia, the next barrier at Y89.00 was quickly erased as rate pushed on to Y89.35 with upside momentum aided by release of a larger than expected Japan current account deficit. Euro-yen, driven to a NY high of Y117.84 in late NY on a mix of euro strength and yen reaction to the Nikkei story, extended into early Asia as it pushed on to Y118.59. Nikkei story confirmation, Japanese cabinet approved fiscal stimulus, which approved Y10.3tln in reconstruction spending, had little effect, enthusiasm on the confirmation seemed to evaporate and allowed yen to regain some lost ground. Exporter sales of euro-yen, and leverage selling in dollar-yen pressed rates back to Y117.68 and Y88.77. Recovery during the Asian afternoon to Y118.20 and Y89.11 lost momentum as fresh selling emerged ahead of the European open, rates trading around Y117.90, Y88.93 at posting.
EasyForexNews Research Team