DJ Forex Focus: Yen Carry Trades Likely To Resume

Trading in the Japanese currency may prove a little more choppy than it was before - given continued background concerns about the meeting of the Group of Seven leading industrial nations in Essen, Germany, Feb. 9-10 - and losses may not be so heavy against the Australian and New Zealand dollars this time around, but against the dollar and the euro there is little reason to see much change. "We are not reducing our long dollar/yen and euro/yen positions ahead of the G7 meeting," said Monica Fan, head of global foreign-exchange strategy at RBC Capital Markets in London. Concern that G7 finance ministers and central bankers might take some coordinated action to stop the yen's decline had helped to discourage carry trades over the last week or so as European officials complained about the economic risks posed by the yen's decline against the euro.

Yen slides, market sees few surprises from G7

TOKYO -- The yen closed in on a four-year low against the dollar and a record trough versus the euro on Friday before a Group of Seven finance ministers' meeting that is unlikely to seriously tackle the yen's weakness, investors said.
The euro also drew support from comments from ECB President Jean-Claude Trichet, who signaled on Thursday that rates could rise in March and possibly later on in the year. The ECB left rates unchanged at 3.5 percent in the previous session.
Market focus is on the statement that will follow the two-day G7 gathering, which starts in Essen, Germany, later in the day.
Some investors were also selling the yen ahead of a market holiday in Japan on Monday.
"The market is betting that the yen won't be included in the communique, which is why we're seeing buying in currencies against the yen," said a forex trader at a European investment bank.

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