According to Ian Stannard, the Chief European Currency strategist in London at Morgan Stanley noted that there are increased negative signals which are generated by the leading indicators signaling an increased level of economic slowdown. Such indictors will only make the yen stronger as the market searches for safety. The BOJ made a technical move by moving 5 trillion yen from its credit loan facility to add to its asset purchases fund which it intends to use in buying short term public debt as opposed to long-term government bonds which has been its tradition.
The search for safe haven currency was also triggered by the Bank of Korea’s decision to lower its interest rates to 3 percent. The yen increased prior to report expected to show Chinese gross domestic product expansion slowed to 7.7 percent in the last quarter from the previous reading of 8.1 percent. In the last quarter the yen has increased by 6.9 percent making it the best performer among the 10 most traded currencies. The dollar increased by 4.6 percent while the euro was among the worst performers, dropping by 3.9 percent.
The Japanese currency increased by 0.7 percent against the euro to trade at 96.93 per euro; it had earlier appreciated to 96.76 the strongest it has been since June 1. The Japanese currency also increased by 0.5 percent against the dollar to trade at 79.33.