Repatriation Likely to Trigger Break in USD JPY through 80.24

Japanese equity markets dropped sharply lowerearly Tuesday driven by panic selling investors after Prime Minister Naoto Kansaid a “substantial amount” of radiation was leaking from a nuclear power plant.

Japanese equity markets droppedsharply lower early Tuesday driven by panic selling investors after PrimeMinister Naoto Kan said a “substantial amount” of radiationwas leaking from a nuclear power plant. The weakness in Japan spread all over the world,sending some global markets to multi-month lows.

The U.S. Dollar is trading higheragainst most major currencies with the exception of the Japanese Yen.Commodity-linked currencies are getting hit very hard with the AustralianDollar, New Zealand Dollar and Canadian Dollar all trading close to 2.0% lower.The British Pound and Euro are also trading lower.

Talk of repatriation is helping tosupport the Japanese Yen this morning. Although the Bank of Japan flooded themarket with a massive amount of liquidity to keep the economy afloat,expectations are for Japanese investors to begin selling equities, U.S.Treasurys, European debt and hard assets to raise even more money. ConvertingDollars to Yen will drive the Japanese currency higher.

The compression of the JapaneseYen’s range over the past few months coupled with the news-driven volatilityhas set up this market for a huge breakout to the downside under 80.24.Repatriation is likely to keep the upside pressure on the currency, however,the more the central bank floods the market with liquidity, the longer it isgoing to take this market to get moving to the upside.