USD/JPY Hits 3 Year Low

The 200 point drop in US stocks has triggered a round of selling in USD/JPY that took the currency pair down to a 3 year low.

This is sure to put further strain on Japanese corporations who will see their profits dwindle as the US dollar continues to fall. The leading and coincident index both deteriorated in the month of January reflecting the softness of Japanese growth. There is no major support in USD/JPY until 101.70, the 2005 low. The S&P 500 and NASDAQ are also trading at the lowest levels since 2006. If this pessimism spills into Asia, we could see further weakness in the Yen crosses. At this time, the market’s appetite for risk is the only thing that matters.