Summary:
On Monday, the yen hovered around the crucial 150 per dollar mark in light trading due to the President's Day holiday closing US markets.
The yen is still rooted near the psychologically key 150 per dollar level on Monday in thin trade as US markets are closed on Monday for the Presidents' Day holiday.
Both US CPI and PPI readings increased more than expected in January, raising the prospects of the Fed’s hawkish tilt in the first half of the year. The dollar index has been up roughly 3% so far.
The BOJ is on track to end negative interest rates in coming months despite the latest recession, say sources familiar with the bank, though weak domestic demand means they may seek more clues on wages growth before acting.
This spring's annual wage negotiations that set pay levels for next year is seen as a more important economic indicator for policymakers to determine the timing of policy pivot than the fourth-quarter GDP.
But given signs of consumption weakness, an end to negative rates is now more likely at the BOJ's April meeting rather than its March gathering, so that the bank more time to assess the health of the economy.
Japan's top currency officials warned last week against what they described as rapid and speculative yen moves when the Japanese currency broke past 150. But they did not say if there would be intervention.
If the yen continues its climb, the resistance around 146.00 per dollar will likely cap the rally. On the other hand, another leg lower could expose the trough of 152.00 anew.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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