The yen started today rebounding against several currencies like the euro and the pound, after CIT Group Inc. said it will probably not receive a federal loan to attempt a restructuring plan, leaving space for speculations that the commercial lender may file for bankruptcy.
The yen was losing against virtually all 16 major traded currencies this week as risk appetite grew fueled by new evidences that a global economic recovery might be near, damping demand for the Japanese currency. Today, the yen rebounded as a U.S. report indicated that the number of foreclosures hit a record in that country, slowing down the current risk appetite and bringing markets to a confused scenario that has been quite present since June. Speculations regarding the future of CIT Group Inc., one of the world’s biggest financial companies, also made traders to act cautiously, since an eventual bankruptcy of this dimension will certainly provoke a period of bearish performance in stock markets.
Analysts stress on the yen as a main determinant factor to measure risk appetite in financial markets, being constantly volatile in these times of uncertainty. After the CIT Group speculations rose among traders following the declaration made yesterday, it is hard to define how intense and long will be the period of risk appetite in financial markets.
EUR/JPY fell to 131.98 as of 10:51 GMT, after topping at 133.39 twelve hours before. NZD/JPY traded at 60.23 after hitting 61.44 yesterday.
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