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Talking Points:

  • Yen buoyed after Japan FinMin Aso says gains not enough to intervene
  • US Dollar continues to fall in the wake of underwhelming inflation data
  • Aussie, NZ Dollars may rise as bets on aggressive Fed rate hikes fade

The Japanese Yen traded higher in Asia Pacific trade after Finance Minister Taro Aso said that its recent gains are “not abrupt enough to intervene.” Corrective flows likely helped as well.The currency sank against its major counterparts as easing worries about aggressive Fed tightening buoyed sentiment. Not surprisingly, this weighed heavily on the perennially anti-risk unit.

The US Dollar continued to slide, extending losses sustained in the wake of January’s US CPI report. A nominally better-than-expected outcome initially buoyed the currency but it soon reversed sharply lower. The on-year inflation rate printed at 2.1 percent, unchanged from the prior month. Perhaps that was disappointing for markets primed for a blowout by the highest wage growth in nine years.

Looking ahead, a quiet European data docket offers few obvious roadblocks to derail established momentum, arguing for continuation. January’s US PPI report is due later in the day but seems unlikely to inspire a turn-round absent a dramatic upside surprise. On balance, this points to continued Yen gains ahead, with similarly yield-linked USD alternatives like the Australian and New Zealand Dollars perhaps due to catch up.

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Asia Pacific Trading Session

Japanese Yen Soars as Finance Minister Talks Down Intervention

European Trading Session

Japanese Yen Soars as Finance Minister Talks Down Intervention

** All times listed in GMT. See the full DailyFX economic calendar here.

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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