Home Yen off again

ALL:  Be alert for comments from officials during G20 meetings ahead of IMF meetings over the weekend.   As mentioned yesterday, we don’t expect any substantial change from the tone adopted in February, which amounted to “do what you want, so long as it is not specifically targeting the currency” and comments from Japan have pretty much confirmed this. See G’20 infographic

CAD:   The CPI data today is expected to see the inflation rate fall from 1.2% to 1.1%, with core rate holding steady at 1.4%.   The CAD has been underperforming of late, with firmer CPI needed to aim for a push back below 1.02 on USDCAD.

Idea of the Day

The yen has been weakening vs. the dollar for most of the week, with the latest impetus coming from the latest comments from Finance Minister Aso. He confirmed what we had suspected, namely that the G20 were not going to oppose the latest policies to revive inflation in Japan on the grounds that they were weakening the currency.

This has allowed USDJPY to move towards the 99.00 level overnight, although the move is more a sign of relief rather than a rush for the exits. As we’ve intimated before, there’s a sense that we need to start seeing the data move the Bank of Japan’s way.   Of course, it’s far too early to expect the inflation data to start moving higher, but the initial impact on confidence and the feed through to wage demands will be worth watching in the coming weeks.

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Latest FX News

JPY: The sense is that the yen is not going to get any grief from G20 leaders, so the currency has duly breathed a sigh of relief.

Gold:  Watching to see if the overnight move above $1,400 is held, as gold will look a little vulnerable if this is not sustained. Certainly there is not yet the sense that there were many on the sidelines waiting for better levels to get it.   At present, it appears that bruised egos abound.

AUD: Steadily climbing during the Asia session towards the 1.0350 area, just pipped by the Kiwi to be the strongest performer on the majors. Once again, the Aussie defying the critics.

Further reading:  Gold Moves to Correct after Plunging to Major Support

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