Economists were speculating that the measures implemented by the Bank of Japan will not be enough to reach the target inflation of 2 percent, but such talks did not deter the Japanese yen from extending yesterday’s advance today.
Analysts pointed out that economic growth does not look robust enough despite all the monetary easing of the BoJ. Indeed, today’s report showed that the monetary base was shrinking last month, not rising as was predicted. Monetary policy meeting minutes will be released later this week, giving insights into thoughts of policy makers and allowing traders to guess future moves of the central bank.
The yen was rising today despite all the talks and prospects for additional stimulus. What is the likely reason for the rally? The answer is simple: this week’s policy meeting of the European Central Bank. Investors are worried that the ECB will throw in additional accommodation and such concerns helped the yen to profit from its role as a safe currency.
USD/JPY was down from 98.59 to 98.30 as of 2:12 GMT today. EUR/JPY dropped from 133.24 to 132.76 and GBP/JPY declined from 157.42 to 157.04.
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