U.S automakers rescue plan collapse – usd/jpy to a 13 year low

The fear is still very much in control of the market, as we witness today the counteractions to the collapse of the U.S auto industry bail out plan.

As the U.S senate rejected the deal – it is likely to see big companies like General Motors and Chrysler in bankruptcy within weeks, this increases the risk sensitivity of investors around the world, and therefore they run once again to the Japanese Yen.

The USDJPY has dropped form 91.6 to 88.17 ( a 13 year low) in less than 2 hours. However, this pair recovered some of its losses later this morning, and for now it is back to trade above the psychological level 90.

The total effect this incident will have on the dollar and the Yen depends solely on its potential to further reduce investors‘ risk appetite.

We should keep in mind that the Japanese are not so keen on seeing their currency strengthening much under 90 Yens per Dollar, and that they might actually do something about it, if and when things will get too ugly in their eyes.

Related posts:

1. Today’s Market focus – U.S rescue plan Share Further details over the U.S financial stimulus package are...
2. Risk Aversion returns – rescue plan not clear enough Share Treasury Secretary Geithner’s speech yesterday contained a lot of...
3. Sterling to a 8 year low against U.S dollar Share (9:00 GMT) The panic in the British banking system...
4. JPY hit 13-year high against the dollar Share Japan continue to monitor its currency strength as YEN...
5. Friday, Sep 26- U.S Bailout plan Uncertainty Share (9:30 AM GMT) the YEN jumped by more than...