Dollar rallies against Yen as US economic data continues to support greenback
April 3rd - The Japanese tankan business survey may have come in looking somewhat robust overnight but this was largely as expected and as such has done little to stem the run of dollar buying that started at the end of last week. Better than expected US economic data - and specifically some bullish PMI readings that are threatening to fuel inflationary pressures – are once again lending support to the hawkish stance over monetary policy at the Fed, and as a result there’s little to stop this latest run of dollar buying. Furthermore, through the latter part of March the Yen has doubtless been supported by ongoing repatriation of funds back to Japan ahead of the Fiscal year end on March 31st. Now that this phase has come to an end, the JPY can expect to find itself under further pressure. Oil prices are however softening after comments from Iran gave some assurance that supplies would be maintained, so this may offer some help to Japanese manufacturers but overall a move on to the mid-March highs of 119 for USD/JPY may well be the next level we find. However, with the Bank of Japan now considering an upward revision in CPI forecasts at the end of this month, the prospect of better yields on the Yen could in turn start lending a degree of support…
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