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Asia Recap: Massive Yen reversal after Y115.50 hit

FXStreet (Bali) - An incredibly volatile session for Yen crosses in particular, which kept rising until a major reversal took prices close to NY close levels, with the Aussie and Kiwi also enjoying some decent two way business.

While the key risk event for the Asian session was Aus jobs report, which came above market expectations, although not providing much of a relief rally for the interest of the Aussie, the big mover was the Japanese Yen, initially dumped all the way to 115.50 against the USD, before a sharp reversal sent the rate back below 115.00, printing session lows of 114.40, a 100+ pips turnaround not to be ignored.

While part of the Yen appreciation late in Asia came in sync with the Nikkei 225 coming off its highs, approach the close down 0.5%, it is undeniable that some sizeable QQE2-held longs must have taken profits off the table, fueling the selling momentum as some late Yen short comers got stopped out of their positions.

Back to the Aussie, the pair remains on a clear bearish momentum across most timeframes, with the upbeat jobs report Down Under barely moving the AUD/USD rate from its Asian range of 0.86-0.8550, with swing occurring testing both edges. NZD/USD also took the spotlight, if only temporarily, as it attempted to find follow through after breaking below the key 0.77/0.7690 critical support, which again, failed to materialize a clean breaking, with the rate pivoting circa 0.77.

Fundamentally, we could break down 4 main stories. Firstly, the Australian jobs report, with figures for the month of October coming better-than-expected, following the softer data revisions from earlier on the week. AUD was sold on the news, given bear sentiment and downward revisions to Sept data as well. Secondly, we saw the BoJ minutes pre-QQE2 announcement, with most member agreeing that yen depreciation is having positive effect on the whole. Thirdly, a headline out of Bloomberg noted that China is unlikely to cut overall rates next year, with the story being carried by MNI later on the session as well. Lastly, another chapter on the currency wars opened up in Asia, after South Korea announced that it will manage Won to move in line with Yen due to increased price pressure on South Korean competitors.

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