Yen takes a dive

The Japanese Yen took a massive hit as the Bank of Japan threatened intervention in the currency market. The USD/Yen pair rose to a high of 91.79 on account of heavy demand for the US dollar from the Japanese export market.

Taking a cue from the sentiment for the coming year, traders have been building positions in major currencies ahead of the holidays in Japan, with the US dollar not too far from the high set about 2 weeks ago, and the Euro also up by about .2%. Equity and commodity markets also saw an upturn, particularly in Crude which traded above $78.

Fundamentally, the Yen has lost out primarily on account of poor economic forecasts which suggest Japan is still not out of the red yet. The outlook is not being helped by Japanese export repatriations, which have lost out due to a stronger Yen, thereby curbing the value of Japanese exports.