DowntownForex

Yen Outperforms Majors

By Forex District – The Dollar and the Yen advanced against higher yielding currencies as concerns mount over the quickness of the global economic recovery. Even as Government stimulus packages and enormous liquidity measures by Central Banks have been implemented, the economic slump is not expected to be followed by a sharp and sustained rebound in activity.

The Japanese Yen is the strongest currency across the board as risk aversion heightened the appeal of the currency. Negative reports in the banking and the airline sectors have traders readjusting some of their positions.

The Sterling has been particularly hit as the Timesonline reported that Lloyds Banking Group is poised to write off as much as £13 billion on its loans on commercial property, business and homeowners as the crisis for the bank deepens. The report also stated UBS expects that Lloyds will announce a half year loss of £6.3 billion as a result of the soaring provisions. In addition, according to the WSJ, major U.S. airlines may have to file for bankruptcy.

As negative reports start the markets on fragile note, oil and gold prices have been trending lower, which consequently weakens the appeal for commodity currencies. Oil now trades below $60 per barrel while Gold nears the $900 level. The Aussie, Kiwi and Loonie are down sharply versus the Dollar and Yen.

Monday’s economic calendar will be light with no major economic news due for release. As a result, currency traders will monitor equity market moves to guide the levels of risk sentiment. Corporate earnings will continue to be monitored with a projected busier schedule Tuesday, that will take center stage on Thursday and Friday as JP Morgan Chase, Citigroup, and Bank of America release second quarter results.

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