Risk aversion boosts yen to 18-mth high vs. dollar

	EUR/USD	USD/JPY	GBP/USD	USD/CHF
	1.48	112.2	2.1065	1.1425
Resistance	1.4752	111.15	2.1015	1.1345
	1.42	110.8	2.0925	1.127
	1.4615	109	2.078	1.119
Support	1.455	108.15	2.0685	1.1155
	1.4405	107.3	2.0605	1.1

The yen sprinted to an 18-month high against the dollar today as investors loosen risky carry trades due to nervousness over credit-related losses at U.S. financial firms and a slide in global equity markets. At the moment the dollar is trading around the levels of 1.4600 against the Euro, around the levels of 110.55 against the Yen and around the levels of 2.0780 against the Sterling.

Worries about U.S. financial institutions' losses from the sub prime mortgage crisis, and ensuing credit market turmoil, were renewed on Friday when Wachovia Corp reported a potential $1.7 billion loss on mortgage-related debt. In addition, Bank of America Corp said late last week that "significant dislocations" in the debt capital markets will hurt fourth-quarter results and JPMorgan Chase & Co Inc said shaky credit markets could trigger more write downs in the fourth quarter "Risk reduction trades are first in priority fundamentals in the FX market special about what taking place in the US. Market, All the talk about sub-prime, that is clearly the driver," said from Finotec analysis team.

“Short positions in the yen crosses are taking place. It’s not too far from the end of this and in respect to euro/dollar; any return in risk appetite would once again push it back above $1.47." The dollar fell to an 18-month low of 109.86, before recovering a little to stand at 110.37, down 0.35 percent on the day.

Declines in equity markets can crimp risk appetite and trigger the unwinding of risky carry trades, when investors sell low-yielding currencies like the yen and buy higher yielders. The high-yielding Australian Dollar and New Zealand dollars against the Yen, favorite carry trade investments, both fell to two-month lows versus the yen.

Although the Reserve Bank of Australia on Monday lifted its underlying inflation forecasts, it trimmed expectations for growth in the year to June 2008, suggesting that it probably won't raise rates again as soon as next month.

Sterling, which has benefited from the highest interest rates within the Group of Seven major economies, was also hit by the carry unwind, falling to its lowest versus the euro since January 2005 , the market targeting to 0.8000 In a few weeks.

Today's Economic Events

Date	Event	Country	Period	Previous	Forecast	Significance
00:00 GMT	Market Holidays	USD	Nov			2
00:00 GMT	Market Holidays	CAD	Nov			2
09:30 GMT	PPI core	GBP	Oct	0.20%	0.20%	3
09:30 GMT	PPI Input m/m	GBP	Oct	3.20%	1.50%	3
23:50 GMT	GDP Deflator	JPY	Quarterly	-0.30%	-0.30%	4
23:50 GMT	GDP Annualized q/q	JPY	Quarterly	-1.20%	1.70%	3