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6 Jan 2015
Yen strengthens amidst falling oil and declining yields – BBH
FXStreet (Barcelona) - The Brown Brothers Harriman Team explain that the drop in US yields, facilitated by declining oil prices, is lifting Yen which gained 0.75% against USD today.
Key Quotes
“Oil prices are tumbling with Brent approaching $51 and WTI near $48.5. This follows yesterday's announcement by Saudi Arabia of deeper discounts next month for the US and Europe. This was seen as a further confirmation that it adheres to its market share strategy.”
“The move is spurring a significant decline in bond yields. The US 10-year yield is below 2% for the first time since mid-October and new record low yields are being seen throughout European core bonds. The German 10-year yield is below 50 bp.”
“The yen is being lifted by the drop in US yields and the 3% fall in the Nikkei, bringing the four-day decline to 5.8%. It is the strongest currency today, gaining about 0.75% against the dollar. The US dollar approached JPY118.65, its lowest level since December 18."
"It is not so much that investors are flocking to the yen, as the safe haven thesis implies. Rather the yen's strength appears largely a function of short-covering.”
Key Quotes
“Oil prices are tumbling with Brent approaching $51 and WTI near $48.5. This follows yesterday's announcement by Saudi Arabia of deeper discounts next month for the US and Europe. This was seen as a further confirmation that it adheres to its market share strategy.”
“The move is spurring a significant decline in bond yields. The US 10-year yield is below 2% for the first time since mid-October and new record low yields are being seen throughout European core bonds. The German 10-year yield is below 50 bp.”
“The yen is being lifted by the drop in US yields and the 3% fall in the Nikkei, bringing the four-day decline to 5.8%. It is the strongest currency today, gaining about 0.75% against the dollar. The US dollar approached JPY118.65, its lowest level since December 18."
"It is not so much that investors are flocking to the yen, as the safe haven thesis implies. Rather the yen's strength appears largely a function of short-covering.”