Dollar and Yen gain in forex trading

The Dollar has gained as the risk trade once again falters.

The USDEUR is 0.659% up with 1 USD fetching 0.6728 EUR.

After yesterday's rejected attempt by the euro to break through 1.50, it is little surprise that consolidation is the name of the game today say analysts at GFT Forex.

The economic news that is sending the risk trade out of favour is helping the Dollar today.

GFT's Kathy Lien says that some of the factors that are leading to risk aversion include:

1. Continued weakness in the U.S. housing market, as evidenced by October's home building starts.
2. Unexpected inflation in October, at a time when many people probably can't afford the higher prices.
3. Weakness in the labor market, even though continuing jobless claims have fallen.

In the end, it is more about conflicting economic data than anything else. Investors are showing caution, concerned that they got ahead of the pace of economic recovery. As a result of this caution, the US dollar, which has been a safe haven currency, is gaining in forex trading.

USDJPY

Heightened levels of risk aversion encouraged yen-carry traders to repatriate funds, helping the yen appreciate against the US dollar this morning.

At 3pm GMT the USDJPY was 0.661% down with 1 USD = 88.7200 JPY

"It’s a risk off day," said Daragh Maher of Calyon. "Equity markets are down and in that kind of environment the dollar and the yen get bid."

Also helping yen advanced was a report from the Organisation for Economic Cooperation (OECD), which raised the country’s GDP forecasts.

The organisation said it expects Japan’s economy to contract by 5.3% this year, up from an earlier projection for a 5.6% contraction.

It also predicts that the Japanese economy will expand by 1.8% next year, substantially faster than the 0.7% growth forecast in June.

WORLD FOREX: Dollar, Yen Advance As Global Stocks Tumble

NEW YORK (Dow Jones)--The euro and other higher-yielding currencies declined against the dollar and yen Thursday as riskier assets fell out of favor on concerns about the slow pace at which the world economy is exiting recession.

"We've got a global recovery underway, but people are beginning to question it, and that's taken them out of the euro and back into the dollar and yen," said Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Conn.

Slumping equity and commodity prices pushed investors back into the U.S. and Japanese currencies. Indications from around the globe of a more restrictive ...