Yen finally takes a breather

It’s not often you have a Japanese official talking about the yen being too weak, but we did overnight, something which put pay to the up-move in USDJPY. Finance Minister Aso said the recent decline had been too fast, which lead to USDJPY reversing from the 118.98 high. The move has been a combination of the continued underlying weakening dynamics in the wake of the BoJ’s move last month, together with the greater uncertainty and policy deadlock caused by the PM’s decision to call a snap election. It could well be that USDJPY needs a period of consolidation after these comments before making an attempt on 120, but in the bigger picture the momentum towards this level look fairly unstoppable.

The dollar itself has also been more consolidative through most of November, the dollar index holding just below the 88.00 level. The euro has been the main factor in this steadier tone, trapped in the 1.24 to 1.26 range for most of November. The ability of the ECB to instigate fresh currency weakness looks limited at this point in time and the Swiss upcoming vote on gold has also provided some support as polls have moved away from a yes vote, reducing the likelihood of the SNB being forced to sell euro’s to buy gold. For today, the data calendar is relatively light, so in theory at least we look set for a relatively smooth ride into the weekend. Inflation data in Canada is the main risk to this view, headline inflation seen rising slightly to 2.1%. USDCAD remains just shy of the recent high at 1.1467, but it would take a much weaker than expected figure to push the market back above 1.14 (currently just above 1.13).

Share: Analysis feed

FxPro UK Limited is authorised and regulated by the Financial Services Authority, registration number 509956. CFDs are leveraged products that incur a high level of risk and it is possible to lose all your capital invested. Please ensure that you understand the risks involved and seek independent advice if necessary.

Disclaimer: This material is considered a marketing communication and does not contain, and should not be construed as containing, investment advice or an investment recommendation or, an offer of or solicitation for any transactions in financial instruments. Past performance is not a guarantee of or prediction of future performance. FxPro does not take into account your personal investment objectives or financial situation. FxPro makes no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any employee of FxPro, a third party or otherwise. This material has not been prepared in accordance with legal requirements promoting the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and may not reflect the opinions of FxPro. This communication must not be reproduced or further distributed without the prior permission of FxPro. Risk Warning: CFDs, which are leveraged products, incur a high level of risk and can result in the loss of all your invested capital. Therefore, CFDs may not be suitable for all investors. You should not risk more than you are prepared to lose. Before deciding to trade, please ensure you understand the risks involved and take into account your level of experience. Seek independent advice if necessary. FxPro Financial Services Ltd is authorised and regulated by the CySEC (licence no. 078/07) and FxPro UK Limited is authorised and regulated by the Financial Services Authority, Number 509956.