NEWS / Foreign Exchange

Yen gains to accelerate...

Market overview

As suspected last week, the carry trades were close to a turning point and given the cascading falls in equities from Asia to the US (as per my long term bearish view of equities), there is reason to suspect further acceleration in yen gains. Against the US dollar my targets are at 108.00 and against sterling, 220.00 is the objective into December. Euro yen should remain under pressure with the upward trend negated in euro dollar.

The commodity currencies, which were mixed, are now broadly weak. The Australian and New Zealand dollars remain a sell with the petro-fuelled Canadian and Norwegian currencies reversing key trends that have worked so well over the past weeks.

Where does this leave cable? with so many key trends reversing, this one could well be the next to go. A break of 2.0247 would confirm that the upward trend is over. However, this would also mean euro sterling is on course for 0.6900.