Just a day following the dollar slumping to its lowest intraday fall since three years against the Japanese yen, analysts believe that the moves in the currency are still not over, and there is more to come. This would be further driven by the U.S. jobs report to be released today.
The yen that has gone from a sharp fall to a pointed gain in a subject of few weeks, traded at its maximum level in two months against the dollar on Thursday. The reasons, which led to the overnight trouncing of USD, are still unclear. Meanwhile traders made use of this prospect by pulling back on the long dollar and short yen positions, with some risk due to the release of the U.S. payroll report that is hopeful of bearish movement for the dollar.
Dollar’s sell off suggests that traders could value the weaker release, but room for further weakness remains.
Today, the dollar traded at 96.80 yen, after falling to about 95.96 suddenly, which depicts a 7.5% move below the high in more than four years that was seen two weeks back. Overall, the dollar was over stretched and the market in the U.S. may seem bullish in the coming days, but it has just got to the fore of itself.
The slump in the yen has not just affected the dollar, but its blow to the stocks here is noticeable that pushed the same into a bear market. The Nikkei here fell by greater than 20% from its five and a half year high set last month.
Analysts speculated that the dollar/yen drift is not just linked to the weakening of the U.S. currency, but also some degree to the disappointment that the growth plan unveiled by the prime minister triggered. It is expected that the USD/JPY will stabilize somewhere around 96, stating that scope of instability that still exists.