The Japanese yen held its own against the US dollar, Kiwi, Aussie, Loonie and British pound, but fell against currencies like the Swiss franc and euro.
Indeed, the gain against the higher-yielding commodity currency signals a sell-off in carry trades, and this is something we often see with sharp declines in US equities, such as the 3.3 percent drop in the DJIA on Monday. In Japanese news, Taro Aso - a former foreign minister - won the race on Monday to become Japan’s next prime minister and will take over for Yasuo Fukuda, who abruptly resigned early this month amidst recession fears and global financial market turmoil. Mr. Aso appears to be quite bearish on growth, saying that in his travels around the regions, he became “even more convinced that the economy was in a recession.” Nevertheless, [B]my long-term bias on the Japanese yen is bullish, as bouts of risk aversion will last for quite some time and Japanese fundamentals rarely have a big impact on the currency.
[/B][B]Related Article[/B]: Risk Appetite And Carry Interest Find Sharp Rebound On Fed Policy Announcements
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Check out Daily Fundamentals in its entirety for analysis and outlooks on the US dollar, euro, British pound, Japanese yen, and the commodity dollars.[/B]