Yen Rises as Deepening Global Recession Spurs Demand for Refuge

March 12 (Bloomberg) -- The yen advanced for a second day against the euro on speculation the deepening global recession will increase demand for the currency as a refuge.
The yen and the greenback both gained versus the Australian and New Zealand dollars after a Japanese report confirmed the world’s second biggest economy shrank last quarter at the fastest pace since 1974, prompting investors to sell higher- yielding assets. The euro may halt a two-day winning streak against the dollar before a German report that economists say will show industrial production dropped for a fifth month, giving the European Central Bank more room to cut interest rates.
“The Japanese report was certainly bad, with some of the data suggesting the economy will keep deteriorating this quarter,” said Yuji Saito, head of the currency group in Tokyo at Societe Generale SA, France’s third-largest bank. “Investors are still risk-averse. This has led to buying of the yen.”
The yen climbed to 123.43 versus the euro as of 6:41 a.m. in London from 124.86 late yesterday in New York. The currency advanced to 96.40 per dollar 97.27. It earlier reached 95.96, the strongest level since Feb. 24.
Japan’s currency gained 2 percent to 62.20 against the Australian dollar and rose 1.3 percent to 49.30 versus the New Zealand dollar. The dollar traded at $1.2803 per euro from $1.2837 late yesterday.

http://www.bloomberg.com/apps/news?pid=20601083&sid=a.OHgzTSGdjU&refer=currency

Market Commentary

MARKET COMMENTARY ON 12TH MARCH 2009

GBP/USD closed higher due to short covering on Wednesday as it consolidated some of this week's decline. The high-range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near-term. If June extends this week's decline, January's low crossing is the next downside target. Closes above the 20-day moving average crossing are needed to confirm that a bottom has been posted.

EUR/USD closed higher on Wednesday. The high-range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are bullish signaling that a low might be in or is near. Closes above the reaction high crossing are needed to confirm that a short-term low has been posted. If June renews this year's decline, October's low crossing is the next downside target.

USD/CHF closed higher on Wednesday and extended last Friday's rally above the 20-day moving average crossing. The high-range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near-term. Closes above the reaction high crossing are needed to renew the rally off February's low. Closes below February's low crossing are needed to renew this year's decline.

USD/CAD closed higher due to short covering on Wednesday as it consolidates above December's low crossing. The mid-range close sets the stage for a steady opening on Thursday. Stochastics and the RSI are oversold but are neutral to bearish signaling that sideways to lower prices are possible near-term. If June extends this year's decline, weekly support crossing is the next downside target. Closes above the 20-day moving average crossing are needed to confirm that a short-term low has been posted.

USD/JPY closed higher on Wednesday as it consolidates above the retracement level of the August-January rally crossing. The high-range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are turning bullish hinting that a short-term low might be in or is near. Closes above the 20-day moving average crossing are needed to confirm that a short-term low has been posted. If June extends this year's decline, the 75% retracement level of the August-January rally crossing is the next downside target.