Coincident stop loss executions in the dollar/yen and the euro/yen at 12:23 pm ET drove the Japanese currency to seven week highs against the dollar and five week highs against the euro just after the London close.
Propelled by sharply lower US Treasury rates, the benchmark 10-Year note has lost 13 basis point since Tuesday, equity losses, disappointment with Japanese Prime Minister Abe's recent economic proposals and fears that a weak job report tomorrow will keep the Federal Reserve quantitative easing program at full bore, traders exited short yen positions in a violent three minute rush that dropped the dollar/yen from 97.23 to 95.91 and the cross from 128.90 to 127.49.
Both stop runs were in the context of a day of heavy losses for the dollar across the board as the prospect of an end to the Fed liquidity programs recedes from the trading horizon.
The dollar has as of 2:50 pm had shed 2.4 percent against the yen at 97.08 (3.6 percent top to bottom), 1.3 percent against the euro at 1.3241 (1.8 percent top to bottom) and 1.4 percent versus the sterling (1.9 percent top to bottom).
Yen gains against the euro have been more restrained, 1 percent at 128.70 (2.5 percent top to bottom,) as the euro strength against the dollar mitigated some of the losses in the cross.
Chief Market Strategist