Just as US swimmer Michael Phelps dominated the Olympic Games today, the collapse of the Yen Crosses dominated the Asian trade session. With the continued selloff of commodities and the huge retracement we've seen in crude oil, it seemed like everyone with a cross Yen position decided to abandon ship at the same time. AUD/JPY and NZD/JPY were hit hard as investors just abandoned the high yielding currencies as many feared the almost inevitable rate cuts on the horizon in Australia and New Zealand. AUD/JPY started the session near 95.40 but was dumped down to lows of 93.15; NZD/JPY had suffered the same fate after a high of near 76.05 the pair collapsed to lows just below 74.00. To drive the point home, witness EUR/JPY and GBP/JPY, as EUR/JPY hit a three month low of 161.57 on risk aversion, GBP/JPY hit an almost two month low of 205.25. EUR/JPY was almost 8 big figures higher just a week ago, a fine example of how the big money is made if you have the right position on.
AUD/USD and NZD/USD were both decimated this session as .8735 highs in the Aussie were quickly forgotten as it skid to 0.8670 before dropping almost 80 pips in less than minutes. The pair, although battered and bruised, regained some ground to reach .8660 by late session. The Kiwi was similarly wounded after a 0.6960 high and subsequently a 0.6825 low. A horrendous overall day for the currencies of those down under….
The Japanese Yen emerged as victor this session as crosses were sold and Yen was bought. The momentum wasn't stopped by a .6% decline in Japan's Q2 GDP as USD/JPY made a nice move from around 109.36 to 108.37 as the session moved on. A bounce near Japan's lunch break put the pair back above 108.70 as of this writing.
Keep in mind we have Euro zone GDP and CPI data tomorrow, but later in London be aware of the Bank of England's Inflation Report at 0930 GMT.
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