Forex Market Update: Japanese Yen Crosses Pare Losses In European Trade

JPY pulled back from its Asian session highs amid reports of bargain hunting in the crosses following reserve management interest for GBP and EUR. USD-JPY stabilized after hitting 95.71 and is changing hands in the low 96s, although the dollar is generally a touch easier in early trade and further gains are capped.

EUR-JPY pushed back in to 134.75 versus the 133.60 area in Asia and GBP-JPY traded back in to the 157.80 area versus 156.40 lows. There have been reports of Japanese investor demand due to more investment trust launch activity. Most of the flow has tended to favor U.S. corporate bonds, but lower U.S. yields have resulted in selling from those hedging structured derivative products. The JPY crosses are likely to lead in holiday thin trade, while USD-JPY option congestion remains at 96.00-96.50.