USD/JPY Continues Consolidation Amid FX Fluctuations

23 November 2009 @ 02:05 pm EDT

The Cable has been relatively stable despite recent volatility in most Dollar crosses along with gold flying towards $1175/oz. Investors were sending the Yen lower earlier today after a set of positive EU PMI data points along with the Dollar weakening in reaction to recent dovish statements from Fed members. However, the USD/JPY has recovered earlier losses and is pushing higher towards 89 after U.S. Existing Home Sales topped analyst expectations. Therefore, it seems the USD/JPY's correlative pattern is a combination of investor appetite for the risk trade countering comparatively loose monetary policy from the Fed. Since the Fed and the BOJ both have their benchmark rates sitting just above zero, the aforementioned forces see to be cancelling each other out and creating comparatively subdued activity in the USD/JPY. However, it will be interesting to see how the USD/JPY reacts to tomorrow's wave of data and news.

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