The JPY posted continuous losses against the majority of its currency counterparts throughout the final days of last week's trading. Many analysts are claiming that President-elect Barack Obama's recent plan for using bailout funds to shore up mortgage foreclosures has investors looking to take on more risk. As this risk appetite increases, traders are borrowing more Yen to purchase higher-yielding assets and riskier investments.
The rebounding U.S. market, increased oil prices, and weakening Yen will likely convince many investors to snatch up exporting companies, according to some analysts. This will likely bolster the Japanese economy to renew some of its lost strength at least for a short while. However, the Japanese economy benefits from a relatively weaker JPY. As a result, the stronger the Japanese economy gets, the lower the Yen will go. Traders should pay attention to the news coming from the Japanese economy. Any hint at a rebounding stock market and increased exports will likely point to a future depreciation of the JPY.