March 02nd, 2013 at 14:31
Japanese yen symbolThe Japanese yen rallied this week amid fears caused by the election in Italy and the threat of automatic budget cuts in the United States. The rally surprised some investors as they have expected that the currency would stay weak because of the intervention threat.
The yen surged tremendously at the start of this week as traders were afraid that the Italian election would produce weak and divided government. The outcome of the vote was exactly the one market participants had feared, but the initial surge of the Japanese currency was too big and hard to maintain. Correspondingly, the yen halted the rally and started to fall back. The losses were small though, nowhere near the earlier gains, even after Haruhiko Kuroda was appointed as the next Bank of Japan Governor. The concerns about the budget sequestration in the USA added to the appeal of the yen as a safe currency.
JPY outperformed other majors amid the risk-adverse sentiment on the Forex market. It even gained on USD, another safe currency, which was weakened as Federal Chairman Ben Bernanke signaled that he is not going to remove quantitative easing.
USD/JPY fell from 94.50 to 90.86 before closing at 93.56 by the end of this week. EUR/JPY declined from 124.88 to 121.84 and its weekly low was at 118.69. GBP/JPY closed at 140.51, falling from the opening level of 142.45, but rising from the low of 137.81.
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