Forexpros – The dollar weakened against the yen on Friday as investors snapped up positions in the Japanese currency on sentiment it will play a greater safe-haven role in 2012.
USD/JPY hit 76.92, down 0.93% and up from a session low of 76.90 and off from a high of 77.74
The pair was likely to seek support at 76.90, Friday’s low, and resistance at 78.04, Wednesday’s high.
While the dollar has regained its role as a safe haven currency over the past few months, the yen has played a similar role as well.
Japan intervened in the currency markets in 2011, selling JPY14.3 trillion to weaken the currency with the aim of helping the country’s all-important export sector.
Japanese Finance Minister Jun Azumi has said he will intervene again should the need arise, as low interest rates and a liquid market make the currency ripe for safe-haven investing.
Many experts say, however, that Japanese officials might not be able to intervene enough to hold off the buyers of this low-volatility currency.
“When avoiding losses trumps profits during a period of risk aversion, low-volatility assets are very appealing,” said Masashi Murata, a currency strategist in Tokyo at Brown Brothers Harriman, according to Bloomberg.
“When the U.S. and Europe moved in a bad direction and people wanted to avoid risk, the yen stood as the only currency that had enough liquidity to absorb demand.”
Meanwhile, the yen was up against the euro and pound, with EUR/JPY falling 1.00% to hit 99.62 and GBP/JPY falling 0.13% to hit 119.55.
Markets will be closed for the New Year’s holiday on Monday although market watchers are getting ready for a Jan. 9 meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel.
Also, 2012 will usher in a New Year of possible downgrades in Europe by ratings agencies.
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