Yen Rebounds Against Majors - 15.1.2013

On Tuesday, January 15, the Japanese yen strengthened against the US dollar, the euro, the British pound and the Australian dollar, although quotes remain not far from recently settled multi-month highs. The yen gained ground after Japan’s Economy minister Akira Amiri said that sharp yen weakening can have negative impact as imports become relatively more expensive. Pair USDJPY reached 89.63, the highest since June 2010, yesterday. In Asian trading hours today the pair fell to 88.61. However the nation’s government is expected to conduct aggressive stimulation policy with the Bank of Japan being the key player. According to the central bank’s governor Masaaki Shirakawa economic activity remains weak, while the outlook is characterized by a considerable degree of uncertainty amid global economy slowdown. In a week the Bank will hold its next policy meeting. Market participants expect the Bank to increase the inflation target to 2% and probably to increase the asset buying and lending program. The USDJPY also fell as the dollar is lacking growth drivers after yesterday’s speech of the Fed president Ben Bernanke in the University of Michigan. According to the minutes of the latest FOMC meeting several members of the Committee expressed the need to terminate the bond purchase program even before the end of the current year. Market participants can now make bets or wait for new signals from the central bank. Yesterday Bernanke refrained from being very optimistic saying that a certain progress had been made but there was a long way before main targets are achieved. Moreover the Fed governor called policymakers to approve debt ceiling increase, as it had already reached 16.4 trillion dollars. The nation’s Treasury indicated that the States will not be able to pay bills in the middle of February if nothing is done. The fiscal issue may become of the key market drivers again.