Markets will still be looking to take a generally optimistic tone towards the global economy and there will be a further flow of funds into high-yield currencies which will tend to undermine the Japanese currency. Exporter selling will tend to limit yen losses and selling pressure will be limited by the fact that there are important structural doubts over both the Euro-zone and US economies. Given these doubts, the yen should be broadly resilient against the Euro and dollar. There is scope for dollar support on dips towards the 97.20 region.

The yen edged weaker on Wednesday with the dollar regaining the 98 level in US trading. Domestically, the revised Japanese GDP data recorded a 3.8% contraction for the first quarter compared with the 4.0% original estimate which maintained the mood of cautious optimism over domestic and international trends

The latest capital account data continued to record net outflows from Japan as domestic investors looked to push funds into high-yield assets. The Australian employment data was stronger than expected which maintained the flow of funds into high-yield assets. The dollar regained the 98 level against the yen, although demand for both currencies was generally weaker. The dollar will gain some support if there is another strong Treasury auction later on Thursday.