With no significant data released, we saw mixed performance in the Japanese Yen. The rally in the Dow has helped to send EUR/JPY, CAD/JPY CHF/JPY and USD/JPY higher. The problem is that not all of the high yielders are participating in the move as AUD/JPY and NZD/JPY are both unchanged on the day while GBP/JPY sold off
The divergent price action could be foreshadowing an end to the rally in the stock market, but it is a bit too early to tell. Meanwhile most Japanese traders are still out of the office celebrating the Golden Week holidays. Comments by Treasury Secretary Paulson are worth noting. In a shift away from his usual buddy over bully approach, Paulson warned that there would punitive trade proposals against China if they did not institute some FX and economic reforms immediately. It is clear that the US is taking a very different approach on China and it is only a matter of time before see another major development on the countrys foreign exchange or trade policies, which would have a beneficial impact on the Japanese Yen.