Wed, 20 Oct 2010 00:00:00 +0200

Yen Manages to Gain on USD in Overnight Trading

After losing close to 60 pips against the US dollar in yesterday's trading, the yen has ?managed to correct itself and is currently trading around the 81.40 level. ?Additionally, the Japanese currency has gained some 130 pips against the UK pound, ?and 75 pips against the Swiss franc. Analysts attribute the yen's gains to a return to ?risk aversion following the surprise announcement out of China yesterday. Whether ?or not these gains are temporary depends on a number of factors.? First, today's UK Spending Review is unlikely to help generate investor confidence in ?the British economy. Should the Bank of England announce a new stimulus plan, as ?predicted, the safe-haven yen is likely to see more gains. At the same time, traders ?always want to pay attention to any moves the Bank of Japan may make in order to ?devalue its currency. The yen's recent gains have not been good for Japan's export ?industry, and a move by the BoJ is not out of the question. ?

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