USD/JPY Falls Below 108 Before FOMC Minutes

The dollar recouped some lost ground to hover just above ¥108 in Tokyo trading on Wednesday after plunging below the ¥108 line on rekindled global economic worries.

At 5 p.m., the dollar was at ¥108.11-12, down from ¥108.50-50 at the same time Tuesday. The euro was at $1.2652-2653, up from $1.2638-2641, and at ¥136.79-81, down from ¥137.13-16.

The greenback dropped to a low around ¥107.75 in early Tokyo trading after coming under renewed selling in overseas trading overnight amid increased risk-averse sentiment among investors, traders said.

The dollar’s topside versus the yen was pressured by stock market slumps both in Japan and abroad as well as by a fall in long-term U.S. interest rates.

The risk aversion was triggered in part by the International Monetary Fund’s latest economic growth forecasts released on Tuesday, as well as a fall in German industrial production in August.

The IMF revised downward the global growth projection by 0.1 point to 3.3 percent for 2014 and by 0.2 point to 3.8 percent for 2015.

Still, demand for the dollar, including from Japanese importers, proved to be solid in the Tokyo market, helping the U.S. currency rebound as high as around ¥108.50 at one point, traders said.

via Japan News

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza