Yen remains buoyant after in-line Japanese data; FOMC awaited.
May 10th - Japanese economic data released overnight may have been somewhat less than inspiring – the index of leading economic indicators having slumped from 90.9 to 60.0 - but this was squarely in-line with expectations, allowing the Yen to resume its push higher through the afternoon session. As such, the territory below 111 on USD/JPY is being tested again and although yesterday’s comments by the BoJ undoubtedly included some concern over the current strength of the currency, with traders looking forward to tonight’s FOMC rate verdict there’s a good chance that we won’t see a quick reversion in the next 12 hours or so. However, once the Fed’s latest call is out, there’s some speculation that the market will start booking profits off recent gains and the subsequent closing of short dollar positions may be sufficient to initiate a bounce-back. There are a number of other economic reports due out today from across Europe, but the Bank of England’s quarterly inflation report stands to offer the most direction. Opinions remain mixed but the target is still 2% and any shortfall will point towards rates being left on hold for some time yet and again news like this could bring some much needed support for the greenback.
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