Investors moving to euro; dropping yen

The euro (EUR) is moving higher against the US dollar, having touched 1.3067 before correcting somewhat to 1.3045. The pair is gaining ground and is affected by continued confirmation from the Fed that quantitative easing will continue for some time as Chairman Bernanke affirmed that “economic conditions aren’t where we’d like them to be”. At the same time the European Central bank is reducing its balance sheet withdrawing liquidity from European markets.

• The Australian dollar (AUD) is pushing higher against the US dollar (USD) moving above 1.0431 as Australia aims at yet another bold move in liberalizing trade with China whose currency will be exchangeable to Australian dollars, helping push Australian exports further.
• The US 500 (SPI) spiked yesterday moving above 1560 as investor’s price in higher earnings for US equities. The index could continue into higher highs as better data is released from the US jobless recovery.
• Weekly option volatilities for the EURUSD dropped further to 8.35 as fear in the markets subsides and option premiums on the pair move lower.

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Movers & Shakers

EURJPY

The euro (EUR) rose to the highest point against the Japanese yen (JPY) as the pair moved to a four year high above 129.50. The expansionary monetary base in Japan has brought about a quest for yield from Japanese investors looking for higher returns in European bonds. This trend is expected to continue as the Bank of Japan goes on with 1% asset purchases per month for the next two years.