Yen Rises on Government Comments about BoJ Policy and Forex
Deliberations in Japan continued into the European session, sending USD/JPY to 93.50 as questions seemed to linger about the strength of future Japanese monetary easing.
Japanese Finance Minister Aso said earlier during the Asian session, that the government has no intention to buy foreign bonds to overcome deflation. During the European session, he said that the decline in Yen value was the unexpected result of policy, and Aso said he won’t comment further on foreign exchange. The comments seemed to fall in line with earlier instructions from the G20 to officials to refrain from talking about the exchange rate.
Aso also said that he has no current intention on changing BoJ law and the BoJ and government must work closely. These comments followed speculation that Abe’s government might change laws to allow the lawmakers to coerce the central bank into adding stimulus. Also today, Chief Cabinet Secretary Suga said the government wants to consult with political parties on BoJ nominations.
The simultaneous comments from Suga and Aso sent some traders buying Yen, and USD/JPY fell a final twenty points to 93.50. The pair has dropped about 75 points since the beginning of the week, unwinding a lot of the bullishness seen immediately after the G20 comments. Support may continue to be provided around 92.50.
Also today, the Euro declined temporarily following French Foreign Minister Fabius’s forecast of growth at 0.2%-0.3% in 2013. The comments seemed to detract from confidence that France will be able to meet its deficit goals for the year, as the economy struggles to show growth. EUR/USD fell below 1.3350 following the remarks, but quickly erased the losses and found its way back above the open.
In just a few minutes, ZEW sentiment surveys for Germany and the Euro-zone will be released. Any significant deviations from expectations could affect Euro trading.
USDJPY 4-Hour: February 19, 2013
Chart created by Benjamin Spier using Marketscope 2.0
--- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to firstname.lastname@example.org .
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