USDJPY remains under pressure

SINGAPORE (Reuters) – The dollar touched a four-month low against the yen on Wednesday, pressured by simmering concerns that the U.S. currency’s yield advantage will start to erode as major central banks head toward unwinding their massive stimulus.

The yen has gained a lift in recent weeks, after the Bank of Japan trimmed its buying of long-dated government bonds in market operations earlier this month, sparking speculation of an eventual exit from its large stimulus.

Analysts said such speculation continued to support the yen, even after BOJ Governor Haruhiko Kuroda on Tuesday stressed the importance of patiently continuing with powerful monetary easing.

“The dilemma here for the Bank of Japan is how do they temper investor expectations?” said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.

“This is the issue that’s on the table right now beyond the broader negative downtrend in the dollar,” Innes said.

Reuters

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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes