Major non-US dollar index finished lower fluctuated

This time, the main non-US currencies fluctuated, the dollar index shot up slightly after a steady decline. States should strive to boost market confidence and to stimulate economic recovery, rather than excessive discuss monetary war, the foreign exchange market increased market nervousness. At the same time, Group Chairman Juncker said the euro, countries must work together all the major currencies in foreign exchange markets to maintain harmony, avoid the "currency war." In addition, the People's Bank of China Governor Zhou Xiaochuan said the yuan exchange rate reform to be gradual; the speed of reform depends on the situation of China's international balance of payments.

Focus, wind vane:

Analysis of major currencies:

Euro / dollar: dollar opened at 1.3884 level this period, early period, the exchange rate fluctuated, were touched intraday high of 1.3981 and intra day low of 1.3836 levels, followed by a steady rise in the exchange rate. Midday with early, small exchange rate correction. After midday section, dollar rebounded slightly, closing at 1.3940 level nearby. From a technical point of view, the euro / dollar was steady at 5 day MA, but the MACD indicator to shorten the red momentum column, KDJ indicator running on high. If the dollar break through 1.4020 level, the upside target will point to 1.4230 level. If the exchange rate fell below the 1.3800 level, the callback target will point to 1.3520 level.

GBP / USD: The dollar opened at 1.5872 level periods, early periods, the exchange rate rose significantly. Midday with early, the exchange rate continues upward trend intraday high of 1.5965 intraday level refresh. After midday section, showing the exchange rate trend of high order, near the end to close at 1.5960 level. From a technical point of view, GBP / USD rose to 5 day MA, MACD momentum indicator red column amplification, KDJ indicator Guaitou up. If the dollar break through 1.6000 mark, the upside target will point to the 1.6180 level. If the exchange rate fell below the 1.5800 level, the callback target will point to 1.5480 level.

USD / JPY: The dollar opened at 82.31 times the level in early trading hours, the exchange rate fell sharply in intraday trading low of 81.74 to refresh the level of 15 years, then the exchange rate steadily. Midday hours, the exchange rate continues rebound, but the late once again come down near the end to close at 81.90 level. From a technical point of view, the dollar / yen by the 5 day moving average repression, MACD indicators column to enlarge the green momentum, KDJ indicators continue to test a low. If the exchange rate fell below the 81.00 level, the downside target will point to the 79.95 level. If the level of the exchange rate exceeded 82.80, the 84.10 level will point to a rebound goal.

Japanese yen soaring 15-year high of conflict, the authorities do not want to wait "to be appreciated"

Fed assumed secondary quantitative easing posture no pushing stock and allows yen up crazy.

Wed intraday, USDJPY once below 85 mark, low see 84.72 15 year low. For this on struggling Japan economy, yen sustained appreciation possible catastrophic consequences. Japanese Prime Naoto Kan 12 emergency call Chief Cabinet Sentani from person express yen "appreciation too fast" concerns. Meanwhile central bank, financial province departments officials also urgent action, on currency implementing verbal intervention.

Analysts believe current yen dollar continuous rose large extent stems U.S. economic fundamentals and weak dollar "was appreciation." For Japanese authorities concerned, through further loosen monetary policies or direct purchasing U.S. dollars etc. to interfere currency, hardly obvious results.

Hearsay central start exchange check

Early June, along global market stabilize, investors focus from Ou Indebted crisis transferred to U.S. economic recovery weak, coupled outsiders for Fed return quantitative easing expectations warming dollar continuous weakening. This background, yen sustained appreciate substantially.

Week Fed announced "quadratic quantitative easing" measures, hinted monetary policy shift after yen rally again speed. 11 intraday, USDJPY once below 85 psychological barrier, low see 84.72 for July 1995 since 15 years high. World War II, yen highest point April 19 1995 hit 79.75.

Yen give export oriented Japan economy multiple shocks. First, strong yen weaken numerous Japanese exporters competitiveness compression enterprise profit; addition, yen may accelerate Japanese enterprises overseas transfer production base exacerbate industry "hollowing."

Reason, Japanese stock recent continuous lower. As 12 close, Nikkei has losing streak five days day decline 0.9% intraday once Chong 13 months low. 11, Japanese stocks decline up 2.7%.

Grim situation also alerted Japanese government. Japanese Prime Naoto Kan the 12th emergency call Chief Cabinet Sentani from person, on yen "appreciation too fast" worried. Day Japanese Finance provincial Financial Officer Tamaki Rintaro with BOJ responsible international affairs governing had macro hold the meeting yen soaring issues consultations.

Given yen uptrend too Meng, Japanese authorities have begun changing word about intervention position began passing tentative measures to intervention.

The 12th afternoon Japanese Finance Minister wild Tianjia Yan specialized on yen exchange rate convene temporary news conference. He conference that exchange excessive fluctuations economic unfavorable he has and Prime Chief Cabinet discussed this issue. Wild Tianjia Yan also said closely Exchange market trends while Japanese Government will yen take "appropriate measures."

Earlier central bank rumored had the 12th morning foreign exchange market conducted rare exchange inspection move be many people as verbal intervention behavior. In Japan, whether intervention currency by Finance provincial decided central are concrete executive body.

Enterprise "pressure test"

IMF a officials Thurs also yen worried. The agency Asia Pacific competent said yen further appreciation will Japan economic outlook bring downside risks, if yen sustained appreciation, IMF will do worried.

Economist noted this wave yen soaring fundamental reason lies around U.S. economic outlook uncertainty enhanced while U.S. sustained relax monetary policy makes Japanese and U.S. spreads narrowed weakened yen as Preferred arbitrage transaction currency attractive.

Other hand, weakening dollar also began prompted more international investors eyeing languished years yen assets then certain extent pushed yen. Addition, export rebound brought surplus increase also increased yen uplink pressure. Ended March 31st year, Japan current surplus up increase 27.9%.

Many analysts think force Japan government intervention currency markets a critical exchange level may 85. Considering USDJPY recently Zeng below that location, outsiders authorities might implementation intervention expected increasingly strongly. Thurs European session USDJPY basic flat, in 85.25 nearby transactions.

More signs that Japanese authorities has yen factors mentioned agenda primary position. Government just announced for 200 enterprises Expand similar "stress tests" survey to understand yen soaring impact.

According Japan METI 11 statement, authorities will about 200 enterprises Expand urgent surveys understand yen sharp Appreciation on domestic enterprises impact. Investigation include yen caused enterprises blow and enterprise taken response measures survey automotive, electronics appliances industries small business. Survey scheduled the end of August ended via production provincial will findings based take corresponding countermeasures.

Intervention easy

Merely verbal intervention little real results. Analysts said now placed Japanese Government before choice two: First further relax monetary policy indirectly yen; Second directly through buy dollar thrown yen manner FX intervention. However, whether which way seem challenges may not effective.

Above IMF officials urges BOJ emulate Fed further relax monetary policy. Although Japan's rates level has close zero and also launched several free additional liquidity Xing measures but IMF 认为, Japanese Bank Rengyou explore other Fangan of Kongjian.

JPMorgan 12 said present seems BOJ likely September 7 next meeting interest meeting ago emergency meeting and extend to market supply liquidity deadline and scale. Similar measures may depress Japan longer rates give currency exert downward pressure. But any further relaxation policy move, may be U.S. continuing monetary loose offset.

Another more powerful measures is through selling yen, buy dollars to direct intervention foreign exchange market. Japanese officials since 2004 been never adopted such interventions.

Japanese Government reason repeatedly refused spend direct intervention means also out helpless. Analyst said Japan To intervention currency, must and exchange market some very powerful trend contend which primary one is dollar overall disadvantaged. Rui letter economist Dong Tao (blog) that yen is "being appreciation". In U.S. economic weakening Ou debt cloud dispersed, US-European quantitative easing exit no period background, Japan contrast appear less bad.

Moreover, Japan intervention currency lack strong external political support. Whether U.S. nor European are playing expand exports license, Japan should initiated coordinated international intervention almost impossible. Eurozone official Wed have said European authorities not welcome Japanese Government intervene yen major central banks jointly intervention more impossible. While If Japan alone action successful unlikely temporary aside, also labeled a "currency manipulation" hat.

Given these reasons, industry universal bearish yen market outlook trend. Barclays and Morgan Chase expects USDJPY may month fell to 79.75 postwar low latter also Japan 1971 abandon dollar peg since USDJPY touched minimum.

U.S. dollar surge, creating the largest single-day gain of about two years

Mainly due to the global growth concerns drag down the stock market, and investors have sought to avoid risk through the traditional safe-haven currency, the dollar Wednesday in New York than all other foreign currencies the yen has rebounded strongly; dollar index record since October 2008 the largest single-day gain, the euro / dollar record by the end of 2008 the largest single-day decline since. Asian markets Thursday in early U.S. dollar index remained at a high of 82.45 near the correction.

As the FED made Tuesday to the bleak assessment of the economic situation, China, Japan and France, a disappointing manufacturing data, and the Bank of England cut its economic growth rate of the expected, those who are more sensitive to economic growth in assets fell sharply.


The impact of hedging by investors, the euro / yen fell nearly 2.3%. Meanwhile, the Australian dollar, Canadian dollar, New Zealand dollar and global economic growth is closely related to the currency against the U.S. dollar's decline were more than 1.0%.

The dollar index closed at 82.38 Wednesday, rose 1.9% over Tuesday's closing left and right, the highest since October 2008 the largest single-day gain.

France, Japan and China to promote financial flows and weak data in U.S. dollars. Although the Wednesday release of the Chinese consumer price index in July, total retail sales of social consumer goods and industrial value added data shows that the Chinese economy continues to grow, but growth is less than expected. In addition, Japan's machinery orders and industrial production data in France fell sharply.

Because of weak U.S. economic reports fueled the economic growth investors worried about a slowdown in the U.S. dollar has been under pressure in the past six weeks. But the global economic situation after the markets have become increasingly uneasy, some investors worry that a weak U.S. economy will also make other parts of the economic slowdown.

Although the U.S. dollar against the euro Wednesday, and other high yielding currencies up, the dollar / yen, slightly lower rate once dropped to 84.74 in the European trading session, the highest since July 1995 the lowest level, but the dollar recovered in the intraday trading session in New York most of the lost ground. U.S. dollar / Japanese yen and U.S. Treasury yields performance is closely related to the Federal Reserve said it would mortgage-backed securities after the expiry of the proceeds reinvested in the bond market, bond yields back down again.


U.S. Treasury bond yields down a large number of safe-haven buying, to encourage a large number of U.S. Treasury bonds held by Japanese investors locked in profits, repatriation of funds. Japan is America's second-largest holder of government bonds, after China.

07:30 GMT, the dollar index was at 82.43, EUR / USD 1.2849/52 report, the dollar / yen, 85.19/23.

U.S. Federal Reserve left interest rates unchanged means taking days of gains

FED Tuesday announced a short-term interest rate decision and policy statement, as expected, to maintain the federal funds rate unchanged at 0% -0.25%, and said it would, when necessary, the use of policy instruments to promote economic recovery and price stability. Message 1, the dollar gave up gains for all days, mainly Africa and the United States surged.

The Fed said in a statement, since the June Federal Open Market Committee meeting after a number of signals that U.S. output and employment have slowed down the pace of recovery. Consumption is gradually rising, but still subject to high unemployment rates, moderate economic growth, declining home prices and tightening credit restrictions. Software and equipment investment is growing, however, continued weakness in non-residential sector, businesses are still reluctant to increase employee. Housing starts remain at weak levels. Bank lending continues to shrink. However, FOMC is expected, despite the recent economic recovery may be slower than expected, but in an environment of price stability, resource utilization will gradually return to a higher level.

The Fed said that inflation rate in recent quarters, tended downward, with the large amount of idle resources to push up the cost pressure, long-term inflation expectations remain uncertain, the inflation rate may be limited for some time in the future.

FOMC maintained the federal funds rate unchanged at 0% -0.25%, and still expected to remain low resource utilization, upward trend of inflation is limited, inflation expectations remained stable economic environment, such as the Federal Reserve to extend the near-zero interest rates for a longer period approach provides a reason.

In order to support price stability in the environment of economic recovery, the Fed will be through the agency debt and MBS principal payments reinvested in longer-term Treasury securities held by the practice to maintain the present level position, and said that if after the expiration of its debt holdings The Fed will be extended.

FOMC also said it will continue to focus on the economic outlook and financial development, and when necessary the use of policy instruments to promote economic recovery and price stability.


The Fed said its holdings of domestic securities held steady at a level of about 2.054 trillion U.S. dollars. Will be released mid-month operation of the temporary arrangements to purchase, and to the middle of next month is expected to purchase the assets. The first report will be released on August 11 and announced to the purchase plan in mid-September.

The Fed said it will start on Aug. 17 to buy U.S. Treasury bonds, purchased two years to focus on the 10-year U.S. Treasury bonds, but also indicated that it may purchase additional year the national debt, including the purchase of inflation-protected bonds. The purchase of the object will focus to avoid high demand for the securities, or a large number of holders of securities.

While many analysts and experts is expected to be announced by the Federal Reserve mortgage-backed bonds due repatriating their capital, but most had expected the Fed to buy MBS rather than the national debt further.

Clearly, the Fed lowered its economic outlook, saying the recovery will be slower than expected. In short, this is dollar negative. Another move was the Fed will fund the repayment of debt due to the re-investment bonds, which bonds will rise, yields fall, it will wither away dollars. But I think this situation will not last, the bond market to digest the Federal Reserve is expected to restart the asset purchase plan may be, but the Fed did not, so I expect the dollar to rebound.


U.S. dollar index was at 80.85, EUR / USD 1.3183/87 report, GBP / USD 1.5849/53 report, the dollar / yen, 85.33/36.

China's holdings of Japanese government bonds for six consecutive months

June this year, China's total holdings of 456.4 billion yen (about 5.3 billion U.S. dollars) of Japanese bonds. By the end of June this year, China has to continue for 6 months, the Japanese bond holdings, holdings of this year's amount will set a new high since 2005.

The move means that China is turning to the huge foreign exchange reserve diversification of assets, including Japanese government bonds. May China's holdings amount has reached 735.2 billion yen, this figure has been reached since 2005 when the historical record, and far more than in January to April this year, the total holdings of 541 billion yen debt.

Diversified hedge the risk of foreign exchange assets

Reported the same day also showed that China's holdings of the first half of the total amount of Japanese government bonds was 1.73 trillion yen. This total is almost 7 times the total in 2005, is also China since 2005, holdings of Japanese government bonds up to a year.

Since June this year, the U.S. dollar against 16 major currencies have been devalued, more and more investors lost confidence in it. China's holdings are likely to dollars or euros in order to hedge the risk of future depreciation. The long term, the yen bonds will lead Asian countries are more widely held, that the Japanese bond market, is good news.

East China is attempting to diversify their risk of holding foreign bonds, while the select holdings of Japanese government bonds because they do not want a weak dollar led to asset deflation.

That record in 2005, when China ended because of a decade-long peg to the dollar system. This year in June, China announced the second exchange reform, the RMB pegged to a basket of currencies began to implement a managed floating exchange rate system, similar to the changes began to occur.

As of the end of June, China's foreign exchange reserves up to 2.45 trillion U.S. dollars. As of the end of May, China held 867.7 billion U.S. dollars of U.S. Treasuries, compared to the 900.2 billion U.S. dollars in April decreased.

In addition, Japan, Korea, Hong Kong, India, and Singapore are also holdings of U.S. Treasuries in May.

But some analysts said that China's holdings of Japanese government bonds does not necessarily mean that China's confidence in the Japanese economy is growing, because China to buy Japanese government bonds are mostly short-term.

Japan welcomes China's purchase debt

Market demand for corresponding rise in Japanese bond prices. Japan's benchmark 10-year bond yields fell on August 4 to 7 year low at 0.995 percent.

Despite the dramatic increase of China's holdings, in fact, only drop in the ocean: The Japanese government bonds average daily amount of 19 trillion yen.

However, the Japanese Ministry of Finance is very welcome China's holdings, because it can attract more people to buy the bonds. Yoshihiko Noda, Japanese Finance Minister last month, said the Chinese government is very welcome to buy Japanese government bonds, which will also help the Japanese government bond investors seek to achieve diversification.

Attract more foreign investors to buy Japanese government bonds on the Japanese government is crucial, because the domestic population continues to shrink is threatening Japan's national saving, and national saving has largely maintained its bond sale.

Interestingly, Japan's Finance Ministry has recently launched an advertising or words to attract the male citizens to buy government bonds: "Japanese government bonds held by most women favor men."

The country's sovereign debt agencies believe that, because about 95% of Japanese government bonds held by domestic investors in the country, this will help increase the national debt credit, although this amount has already reached Japan, 200% of gross domestic product as high. However, this evidence has begun to decline: Since March this year, holding 12% of the outstanding debt of the Japanese public pension funds have started the first 9 years of debt reduction.