Week in FX Asia – Asian Currencies get a boost from Fed Minutes

Last week some Asian currencies like the Indian Rupee touched all time lows on the back of a good employment indicator from the US. The logic being that comments made by Federal Reserve Chairman Ben Bernanke strongly suggested that the US was close to ending its quantitative easing program given the apparent recovery of the economy. One of the key triggers for the tapering of bond buying, which will automatically mean an end of low rates in the US is employment.

This week minutes of the US Fed’s; FOMC meeting were released and it showed a clear divide between members. For some it is too soon to move out of a lower rate environment given the current conditions of other large economies such as Japan, Europe and China. The minutes weakened the USD versus all currencies. The INR was able to recover some lost ground. The JPY which the Japanese government is aiming for a weakening was strengthened on the back of USD weakness.

The Bank of Japan was not able to keep the JPY low, and in fact praised the pace of economic recovery. The economic indicators in the world’s third largest economy have been positive in the last month. There are some clouds ahead such as the plans to change the inflation measures, which could make it harder for the BoJ to hit the very bold 2% inflation target in the 2 years plus timeline.

The JPY started the week at 101.28 versus the USD until the Fed Minutes were released when it dropped to below 99. The end of the week brought a slight depreciation to end the week just above 99.

The INR was coming for touching all time lows at least once in the past two weeks. The USD/INR opened the trading week at 61.05 and started to slide as the week progressed due to announcements and statements from the Reserve Bank of India that was actively lobbying to stabilize the currency. With all the effort from the RBI the INR did not go back below to 58 even after the Fed Minutes were released on July 10th.


* USD Advance Retail Sales
* AUD RBA Policy Meeting – July Minutes
* GBP Consumer Price Index
* EUR Euro-Zone Consumer Price Index
* EUR German ZEW Survey (Economic Sentiment)
* USD Consumer Price Index
* JPY Bank of Japan June 10-11 meeting minutes
* GBP Bank of England Minutes
* CAD Bank of Canada Rate Decision
* USD Fed’s Bernanke Semi-Annual Policy Report to House and Senate
* USD U.S. Federal Reserve Releases Beige Book
* EUR G20 Labour Ministers Meeting in Russia
* CAD Consumer Price Index

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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, Alfonso Esparza 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 has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. 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