On Friday the yen hit a 14-year high against the dollar and it rallied broadly, while the dollar climbed against most other currencies as carry trades and risk exposure were cut down by the investors on concern about Dubai’s debt problems.

Exchange rates recovered in London

However, by mid-session in London, exchange rates had recovered some ground and they were trading in narrower ranges, whereas volatility had eased.

Fears of outright intervention

It has been said by the market sources that the Bank of Japan checked exchange rates earlier in Asian trading with Japanese commercial banks. It has raised fears of outright intervention, although it has been said by the analysts that it has less probability right now.

Dollar against Yen

Before pulling back up to 86.50 yen at 1200 GMT, the dollar dropped down as far as 84.82 yen JPY=, which is its weakest since 1995 and it is ever closer to its record low of 79.75.

The dollar index

At 1230 GMT the dollar index, was up 0.6 percent at 75.29 .DXY. This index is a measure of dollar’s value against six major currencies.

Euro

The euro had a fall of 0.75% at $1.4900 EUR=, having earlier fallen as low as $1.4830 EUR=. It has dropped down more then three cents from a 15-month high of $1.5144 that it had reached on Wednesday.

Drop in Oil, gold and silver prices

It has been shown by U.S. stock futures that Wall Street opening drop 2.5%, oil dropped down 4.5 percent CLc1, and gold XAU= and silver XAG= had a lost of 3 and 4%, respectively.

Implied volatilities on one-week euro/dollar currency options

Implied volatilities on one-week euro/dollar currency options EURSWO= has shown a rise up to 13% earlier, which is a high level that is not seen since June.

One-week implied volatilities on dollar/yen options

One-week implied volatilities on dollar/yen options has shown a quick rise above 18% JPYSWO= for the first time since April, which is a sharp rise from a 2009 low of 5% earlier this week.

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