Japanese yen is sliding as risk appetite rises on unexpectedly good news out of Europe. The fact that there has been something resembling progress has led to an increase in risk appetite, and the yen is falling as Forex traders look for better yields, and stop worrying so much about finding safe haven.
Herman Van Rompuy, President of the European Council, announced that Spanish banks will be seeing better loan terms, hopefully lowering Spanish bond yields so that they are manageable. On top of that, countries are being allowed access to EU bailout funds without the need to comply with strict austerity measures. On top of that, European leaders agreed to create a supervisory body under the European Central Bank to centrally regulate member countries’ banks. This organization is supposed to be in place by the end of the year.
As a result, Japanese yen is falling. This is good news to Japanese leaders, who prefer a weaker yen. A weaker yen offers trade advantages to Japan, and leaders prefer that. In the current climate, higher yields are preferable to stability and capital preservation anyway, so the yen is down against its major counterparts.
At 14:23 GMT USD/JPY is up to 79.5905 from the open at 79.4545. EUR/JPY is up to 100.8090 from the open at 98.8675. GBP/JPY is up to 124.7910 from the open at 123.3050.
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