By FX Empire.com
Losses are seen across the broad markets today, after the Japanese government intervened once again and sold the yen to weaken its currency which reached record highs, while some companies reported disappointing earnings.
Since the yen reached to a post-World War II high against the dollar,Japan’s exporters faced considerable losses since the value of their products increased overseas. Now other countries in Asia may follow Japan to protect their exports.
Before the G20 meeting on Nov. 3-4 in Cannes,France, and awaiting the details of the European bailout plan and how it will work, investors are avoiding the risky higher yielding assets and demand on safe haven increased.
An additional downside pressure was imposed on the markets today by the disappointing data from Europe, where the unemployment rate rose in Sep. to 10.2% from 10.0% adding more pressures on the ECB to cut rates.
Caution is also weighing down on markets ahead of some important economic data this week, where the Reserve Bank of Australia is expected on Tuesday to cut the benchmark interest rates by 25 basis points to 4.50% from 4.75%.
Meanwhile the European Central Bank might cut its interest rate by 25 basis points to 1.25% from 1.50% on Nov. 3, as for the Feds, they might embark on another round of quantitative easing during the FOMC meeting on Nov.2.
Traders may continue to target lower yielding assets since the US will release later this week its non-farm payrolls and the unemployment rate which is expected to remain high at 9.1% in Oct.
The prospects of ECB cutting rates is already weighing down on the euro, which is trading as of this writing around 1.4000 from the opening at 1.4150. The AUD also fell today trading around 1.0570.
The yen‘s sharp fall also added to the losses seen across the broad markets today, as it favored buying the US dollar. The yen fell following the intervention to 79.50 from the opening at 75.68, yet as of this writing is trading around 77.85.
The dollar index gained today trading as of this writing around 75.95 from the opening of 75.00. The pound is moving to the downside around 1.6017 although the economy reported a better than expected mortgage approvals report.
Asian stocks fell today where the MSCI Asia Pacific Index fell today by 3.3% at 15:13 inTokyo, its biggest fall in a month. Nikkei closed lower by 0.69%, while Hang Seng closed lower by 0.77%.
In Europe FTSE 100 dropped as of this writing by 1.05% and DAX fell 1.40%, while CAC 40 fell by 1.70%. Fears from a possible slowdown in the global economy brought losses within the commodity markets as well.
As traders were able to shift their attention from Europe to the global economic recovery, fears pushed oil prices down to $92.50 per barrel from the highest at $93.78, while gold fell to $1717.50 per ounce from the highest $1744.79.
China on the other hand pledged to maintain its strict real estates policies in the coming months to keep prices of properties under control. Premier Wen Jiabao said China will “firmly” maintain its property curbs.
