AS RISK aversion rises and US yields fall back, we have seen the yen gain ground especially against the high yielders, particularly the Australian dollar and New Zealand dollar. This could start to make Japanese exporters uncomfortable as we head back towards the flash crash lows of 6 May at ¥ 87.95 against the US dollar. Look to sell rallies in yen crosses while "risk off" is in play. CMC Markets’ spread on the following yen currency pairs is US dollar-yen: ¥88.74-¥88.76, Aussie dollar-yen: ¥76.07-¥76.11 and Kiwi dollar-yen: ¥61.76-¥61.82
Sterling has had such a decent run on the back of US dollar weakness that it might come up against some stiff resistance during the current period of risk aversion. It is at risk of some weakness, and investors should sell into strength. Capital Spreads quotes $1.5050-$1.5052.
The single currency is staring into something of an abyss with the expiry of the ECB’s liquidity guarantees for Eurozone banks on 1 July. This could bring with it a flood of bond issues from banks at ever increasing yields and, wary of this, investors may start shying away from the euro, while buying into sterling on the back of inflation concerns. The current IG Index price is £0.8100-£0.8102.
As was pointed out in this column last week, euro-Swiss franc continues to hit record lows as the SNB avoids intervening. It seems inevitable the SFr1.3000 level is the target and it may get there soon. Spread Co offers a spread on euro-Swiss franc of SFr1.3256-1.3259.