Week in FX Asia – Is the Currency of the Rising Sun in Free-Fall?

How much room has the Yen to fall? The Yen bears seem to be back in full force and are becoming very vocal. The currency of the ‘rising sun’ has ended the week sharply lower outright, mostly due to comments from LDP leader Abe suggesting a foreign bond component to the Bank of Japan easing. If true, this would become a game changer for further weakness of the currency, however, if and when decided, it will only ever be a gradual process, as international pushback should become a natural constraint.

Easing hopes in Q1 are expected to provide good support for the currency pair. If US growth outperforms next year, the mighty ‘dollar’ could end up pushing the yen deep into a three-figure dollar extreme. Some analysts believe a “significant overvaluation of the yen, a deteriorating balance of payments in Japan and a potential new major shift in their monetary policy” all point to a significant free-fall of their currency. Next month’s Japanese election is the unknown variable.

USDJPY

 

AUDUSD

 

WEEK AHEAD

  • USD ISM Manufacturing
  • AUD Reserve Bank of Australia Rate Decision
  • EUR Euro-Zone Producer Price Index
  • CAD Bank of Canada Rate Decision
  • AUD Gross Domestic Product
  • NZD Reserve Bank of New Zealand Rate Decision
  • EUR Euro-Zone GDP
  • GBP Bank of England Rate Decision
  • EUR European Central Bank Rate Decision
  • USD Change in Non-farm Payrolls
  • USD U. of Michigan Confidence

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.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell
Dean Popplewell

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