The Japanese Yen benefited from a poor performance in the U.S. stock market this week. Traders sold off high yielding assets in favor of the Yen as their need for risk abated.

A loss from AIG, which fueled the decline in stocks, is another indication of the depth of the subprime mortgage crisis. Look for continued weakness in the stock market next week to drive the USDJPY lower.

Expectations are for the Yen to appreciate over the short-term as the charts indicate the USDJPY has room to the downside. The first minor downside target is 102.87, followed by 100.72. Up trending Gann angle support also is showing support at 100.61. Look to sell a rally back to 104.21 in anticipation for a new leg down.

Strengthening Canadian Economy and Stronger Commodities Bearish for USDCAD

The strong surge in crude oil helped the Canadian Dollar gain about 1.4 percent this week. The Canadian Dollar received an additional boost on Friday when a government report showed that employers added more jobs than expected in April.

This is the worst of combinations for USDCAD bulls. For several months, the pair has been trading inside of a tight range. The bearish combination of higher crude oil and an improving economy may trigger a breakout to the downside.

Bank of England Likely to Resume Rate Cuts

The GBPUSD suffered its third consecutive weekly loss as speculators sold heavily in anticipation of another series of interest rate cuts by the Bank of England.

Recent talk by the BoE has been hawkish regarding interest rates, leading to a decision to leave rates unchanged at its last meeting on May 8. The weakness in AIG is likely to affect the U.K. as traders bet that the subprime turmoil will continue to affect the banking industry.

EURUSD May Trade in a Range