Kantox currency update: the yen continues rallying on BoJ tapering hopes
The yen is being the strongest performer of the major currencies this week, boosted by the Bank of Japan’s decision to scale back its long-term Japanese Government bonds purchases, which has raised market speculation about the tapering of its massive monetary stimulus program.
The euro has extended its reversal from three-month highs, with the dollar struggling to regain lost ground after the sharp depreciation undergone in the last two months of 2017.
EUR/USD extends reversal from 1.2090 highs. The euro traded lower for the third consecutive day on Tuesday to hit two-week lows at 1.1920. At London market opening times, the EUR/USD is trading at 1.1935.
GBP/USD: remains steady above 1.3500. The pound retreated on Tuesday after reaching session highs at 1.3680, although the pair remains consolidating between 1.3500 and 1.3600, right below three-month highs. At London market opening times, the GBP/USD is trading at 1.3515.
USD/JPY extends losses below 112.00. The yen advanced sharply for the second consecutive day on Tuesday, fuelled by market speculation about the possibility of the Bank of Japan turning towards some sort of QE tapering, which has pushed the dollar below 112.00 for the first time in five weeks. At London market opening times, the USD/JPY is trading at 111.95.
In the Calendar Today
At 09:30 GMT, the only relevant event today will be the UK Manufacturing and industrial production figures. The manufacturing PMI Index points out to a solid expansion of the sector’s activity in the second half of the year. If that trend reflects in the manufacturing and industrial production, it might add buying pressure on the pound.
At 14:00 GMT and 18:30 GMT investors will be attentive to the speeches of Fed officials Evans and Bullard, whose comments about the bank’s monetary policy plans might have a certain impact on the dollar’s volatility.
09:30 GMT UK: Manufacturing Production (MoM) (Nov)
Previous: 0.1 % Expected: 0.3%
09:30 GMT UK: Industrial Production (MoM) (Nov)
Previous: 0.0 % Expected: 0.3%
14:00 GMT Fed: Evans’ speech
18:30 GMT Fed: Bullard’s speech