Japanese Yen Falters as Risk Appetite Makes a Comeback

The Japanese yen tumbled across most of the majors on Tuesday, as USD/JPY, EUR/JPY, and GBP/JPY all jumped amidst building appetite for risk. The moves were in line with the gains witnessed in the US stock markets, as the DJIA rose 0.55 percent to close at 12,548.35 while Treasuries tumbled, leading yields on 2 and 10-year notes to climb 7bps.

However, this moves may be temporary as risk factors linger in the markets. Indeed, on Friday the BBA will announce the result of their discussions about the critical Libor rate, and any changes to this incredibly important interest rate could rock the markets. For more on what changes could be made, as well as alternatives to Libor, check out our special report on How the Search for a ‘New Libor’ Could Impact Carry Trades.’