Any comments from the Finance Ministry will be watched very closely if there is any evidence of accelerated dollar selling below the important support region around the 95 level. There is also a strong probability that there will be additional capital outflows from Japan on yen rallies which will make it difficult for the Japanese currency to sustain gains.
The yen will still tend to gain some support if fears over the global recovery intensify as trends in risk appetite remain very important. Asian stock markets stabilised on Tuesday, although gains were very limited and the yen held a firm tone as there was a flow into shorter-dated bonds and more defensive instruments.
The dollar was unable to regain the 95.50 level and retreated again in New York, undermined by reports of BIS sell orders and a slide on Wall Street.
By: Darrell Jobman
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