Yen Weakens After Pension Reform and Strong USD

The dollar pared earlier losses and gained against the yen on Friday after Japan’s welfare minister said reforms for the country’s giant pension fund would continue as planned.

The greenback also held near a four-year high against a basket of major currencies, and further gains looked likely for the U.S. currency as it boasted its the biggest yield advantage over the euro in 15 years.

The dollar had stumbled overnight as a sell off on Wall Street favoured the safe-haven yen.

The dollar recovered, however, after Japan’s Welfare Minister Yasuhisa Shiozaki denied media reports that suggested Tokyo would delay reforming its $1.26 trillion Government Pension Investment Fund (GPIF)

Reform of the fund is expected to result in more investment being channelled into Japanese equities and overseas assets, and reports of a possibe delay had given the yen a bullish nudge, until the minister spoke out.

via Reuters

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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