At the beginning of a new week the Bank of Japan (BoJ) intervened in the currencies markets to control the rapid incline seen on the Japanese yen, which reached new all-time recorded against the U.S. dollar earlier today, driving the Bank to enter the market and sell huge amount of yen and buy dollars instead, where as we can see the strong yen has affected the pace of recovery and exports in Japan, especially when the nation is attempting to overcome the rising challenges after the disaster that hit the nation in March.
The U.S. dollar benefited the most from the intervention, where the dollar recovered most of the losses incurred in the past week and reflected negative demand for other major currencies such as the euro, the sterling pound and the Swiss franc. The U.S. dollar also force downside pressures on commodities and metals to trade lower at the beginning of this week.
This intervention from the Bank of Japan was already expected as we mentioned in our previous report on Friday, where the strengthening yen in addition to the slowdown in global growth prevented the nation from recovering after the earthquake which hit Japan in March.
The USD/JPY pair opened this week at 75.68, and reached an all-time low record at 75.55; however, after the Bank of Japan's intervention, the pair rebounded to a high of 79.53, and is currently hovering around 78.10.
The Japanese Finance Minister, Mr. Azumi, said that the government's intervention was due to the strengthening yen against the dollar, which had a negative impact on the economic recovery in Japan, while the government will continue to intervene until the yen reaches to the safe areas.
The U.S. dollar index (USDIX) opened the session today at 75.00, and recorded the highest at 76.32 and the lowest at 74.97, and is trading now around 76.00.
On the other hand, heavy downbeat fundamentals from Europe had pressured the common currency further to the downside against the strengthening U.S. dollar, where the euro zone released the unemployment rate for September in addition to the consumer price index annual estimate for October.
The unemployment rate unexpectedly surged to 10.2% from the revised previous of 10.1%, beating market expectations of 10.0%, while the consumer price index showed that inflation lingered at 3.0% to remain above the European Central Bank's target for the 11th consecutive month.
The EUR/USD opened the session today at 1.4150 and recorded the highest at 1.4169 and the lowest at 1.3969, and is trading at the moment around 1.3992.