Week in FX Asia – Yen Depreciation Continues as Abe Returns

New year, new government and a newly depreciated yen. The JPY is continuing the same trend with which it ended the year. Shinzo Abe has made it very clear that he expects the Bank of Japan to get all the weapons in the Central Bank arsenal to bring Japan out of a recession. This includes depreciating the yen, increasing inflation targets and stimulus programs.

That is only part of the equation. The USD has recovered against the yen after the Fed released its Federal Open Market Committee minutes. There have been hints throughout last year that there was a division regarding Quantitative easing and the role of the Central Bank and the latest minutes highlight that division. It seems the members are now moving more in favour of ending QE4 in 2013. Previously no date was given or even suggested so this is a big step forward if taken into consideration alongside other signs of economic recovery such as the employment numbers and manufacturing surveys.

The current levels of the yen have been a breath of fresh air for exporters as the currency has touched a 2 year high versus the USD.

 

USD/SGD – Private home prices up 1.8% on-quarter in Q4 2012 | OANDA Forex Blog
Thailand Central Bank Could Leave Rates Unchanged | OANDA Forex Blog
Japanese CEOs believe in “Moderate Recovery” | OANDA Forex Blog
China December PMI Flat Barely Above Expansion | OANDA Forex Blog
Singapore Grows 1.1 percent Beating Estimates | OANDA Forex Blog
Higher Y/Y Home Prices In China – 1st time in 9 months | OANDA Forex Blog

WEEK AHEAD

  • EUR Euro-zone Producer Price Index
  • CNY Consumer Price Index
  • CNY New Yuan Loans
  • GBP Bank of England Rate Decision
  • GBP BOE Asset Purchase Target
  • EUR European Central Bank Rate Decision
  • GBP NIESR Gross Domestic Product Estimate

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza