Japanese Yen Gains after Inflation Comments, GBP/JPY, USD/JPY Exchange Rates Lower

On Tuesday the Japanese Yen advanced on the majority of its currency rivals after Japan’s economy minister asserted that neither the Bank of Japan (BOJ) nor the government has set a target date for achieving 2% domestic inflation. According to Tokyo-based industry expert Yuji Saito; ‘The government seems to have relaxed its attitude toward the inflation target. Speculation about additional Bank of Japan easing is getting pushed back, prompting some Yen buying.’ There had been some expectations that the BOJ would introduce further easing measures when it gathered last week, but it refrained from doing so, lending the Yen support. The Yen advanced by around 0.3% against the US Dollar to achieve 118.07 and climbed by 0.4% against the Euro. The Yen gained 0.4% against the Pound to trade in the region of 178.0700.

The Japanese Yen continued trending in a stronger position as Japan’s Services PPI came in at 3.6% in December, year-on-year, rather than dipping to 3.5% as forecast. Japan’s Small Business Confidence index for January eased from 46.7 to 46.3. During the European session the GBP/JPY pairing consolidated declines as the UK’s fourth quarter growth data fell short of forecasts on both an annual and quarterly basis. The USD/JPY pairing could experience notable exchange rate movement in the hours ahead as the US publishes durable goods orders and consumer confidence data as well as the Markit Services/Composite PMI’s. Investors with an interest in the Japanese Yen will also be looking ahead to Wednesday and the publication of Japan’s Retail Trade figures.

In other currency news, the Euro recovered some of its recent losses against peers like the Pound and ‘Greenback’ as Grexit concerns paled and investors chose to focus on the European Central Bank’s latest attempt to bolster the currency boc. The Pound was broadly softer as a result of sub-par inflation stats and the US Dollar came under pressure as a blizzard hit Wall Street. Commodity-driven currencies like the Canadian, Australian and New Zealand Dollar’s remained under pressure amid weak oil, gold and copper prices. With the Federal Open Market Committee (FOMC) due to announce its policy decision on Wednesday, notable currency market movement can be expected as the week continues.