Last week, a further weakening of the yen took the market by surprise with few analysts expecting the currency to decline so far. With Japan’s economic policy minister Akira Amari warning that further weakness may “hurt people’s lives”; it is not only traders who are looking at this currency closely. Technical analysis indicates that further weakening to 103 is a real possibility, however if the US economy shows further signs of recovery the yen may weaken beyond 103.
The USD weakened earlier last week with EUR/USD moving from 1.2849 to 1.2930 on Tuesday. The Australian dollar rebounded from its worst two week loss in more than a year and has subsequently spent much of Tuesday trading in a range of around 0.98. Although there have been some economic glimmers of hope in the UK, the sterling is still trading within a downtrend. Home sales data in the last two weeks was positive, but unfortunately inflation has slowed, suggesting that the UK economy is not as healthy as the UK government would like it to be.
Gold was the big question mark for traders last week; having suffered a substantial drop since the early weeks of the month, it rebounded from 1337 dollars an ounce on Monday to trade at 1399 on Tuesday. Moody’s rating agency have warned that the US credit rating may be cut, and as gold acts as a safe haven in times of high risk, investors may now be turning to it as their preferred trading instrument.
On Monday the price of oil jumped from 95.48 dollars a barrel to 97.33, before dropping back to 95.75 on Wednesday. This suggests that the market may already have priced in expectations for a higher oil inventory and thus we may not see further substantial fluctuations.
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