Yen in focus as N. Korea tensions mount and monetary policy returns to spotlight.
June 20th - Despite some softer than expected US housing data, there’s been limited impact on the dollar in recent trade with the majority of volatility instead being focussed on the Yen. Ongoing concern over the likely forthcoming missile test by North Korea combined with the more fundamental point that the Bank of Japan may be set to extend it’s zero rate policy on interest rates had been making it difficult for many to justify buying the Yen. However, the latest BoJ monetary policy meeting minutes have just been released this morning and it does seem that although support for a quick end to the lax monetary policy is limited and powerful bodies such as the country’s Ministry of Finance are clearly lobbying for the situation to remain unchanged for the time being, comments from BoJ Governor Fukui have been a little more hawkish. Specifically he has stated that rates will rise if economic growth is sustained at current rates and that the bank won’t be influenced by political pressures. As a result, this has been sufficient to kick start another run of Yen buying, pushing USD/JPY back below the 115 level although this rally may soon run out of steam and with another generally quiet day on the economic calendar, expect traders to pick over the smaller details as they attempt to find further direction…
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