28 MAY 2013: JAPANESE STOCKS FALL AS YEN SOARS

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The Japanese stock market continued to fall another 3,25 %, after Friday’s dramatic 7,32 % fall. The US dollar simultaneously witnessed its worst week against the JPY in one year, dropping from 103.50 to 101.09 Yen a Dollar on Friday.The Yen traded even lower yesterday, dipping below 101 at one point.

 

Western European equity markets have recovered from the downward shock at the end of last week. The French index jumped 0.97 % during yesterday’s trade, and Germany’s Frankfurt index added another 0.85 %. Nordic equities were strong while the British FYTSE lost 0.64 %. Developing markets also recovered with India jumping 2.47 %.

 

The Australian Dollar continues to fall, and trades just above 96 against the USD, on news that China has no intentions to stimulate growth at the expense of environment. The fall in the Chinese PMI last week had a further negative effect. Australia is dependent on coal export and Chinese growth. For Australia, its alarming that China is said to cut down on coal and encourage gas and solar energy to fight pollution.

 

The Euro/USD is strengthened and close to break through both the 21 and 50 days moving averages, helped by lower yields on Italian and Spanish bonds. The recent sharp downturn in USD/JPY is seen by analysts as a correction after huge amount of speculative Dollars gambled on a lower Yen. The strength of the yen is, however, temporary, and the weakness in the Japanese currency is bound to continue.
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