USD Loses Ground Against JPY Amid Reserve Currency Talks

The backdrop of risk aversion, amid concerns about the global growth outlook amid recent poor unemployment data (particularly the disappointing U.S. payrolls data Thursday) and incipient stock market doubts about corporate profitability potential, should keep the JPY and USD underpinned against most currencies. The JPY outperformed the USD during Asian trade, perhaps as the U.S. currency’s reserve currency status was once again in focus ahead of the G8 meeting this week, with another BRIC nation, India, calling for diversification, and with ECB’s Trichet, France, Russia and China all expressing various views (although China and Russia admitted there was little alternative to the USD). Realistic alternatives to the USD remain a long way off, while the eventual end of the U.S. currency’s hegemony as a reserve currency may not – ultimately – be such a negative (as it may reduce the supply of dollars, cause U.S. yields to shift higher and improve the U.S. current account position). The calendar is fairly quiet today: Europe has the possible release of U.K. HBOS house price data and a couple of ECB speeches, while the U.S. has the June ISM-services index release.