Re-powering the yen


USD: Initial claims data more in focus following the disappointing jobs report last week and the recent move to a 4-month high on the headline number.  Another weak release could put the dollar on the back-foot.

Idea of the Day

The yen did not quite cross the line over 100 on USDJPY overnight, but upward momentum remains firmly in place.  Despite Kuroda’s comments yesterday (suggesting that BoJ not aiming policy at yen, measures are enough for now), the question is to what extent the move receives a momentum of its own, powered by carry trades and Japanese investors seeking better returns elsewhere.

The weekly data suggested this was not yet the case, but it’s probably early days to view the true trend on these numbers.  But the message is that the BoJ has done its bit and it’s going to be the reaction of investors that determine the extent to which the yen weakens further over the coming weeks.

Latest FX News

AUD: Softer overnight on weaker than expected labour market numbers, but recall that last month’s releases was the strongest monthly gain in employment for 14 years, so some correction not that surprising. March numbers showed 36.1k fall in employment (revised 74k rise previously), with rate rising to 5.6% (from 5.4%).  Aussie was relatively buoyant considering and AUDUSD holding above the 1.05 level. More: AUDUSD Turns Back In Bullish Mode As Price Exceeds 1.0500 (Elliott Wave)

JPY:  Not quite pushing the major 100 level on USDJPY, last seen in April 2009.  Weekly data showed that domestic investors were net sellers of overseas bonds last week, which served to undermine the perception of moving overseas in the new fiscal year and renewed QE.  It’s probably early days.  Wednesday proved to be lively, with comments from Kuroda during the European session halting the yen decline, only to be scuppered by a firmer dollar after the early Fed minutes.

EUR: The fun continues to be centred on EURJPY, with the push above the 130 level struggling to be sustained towards the end of the European session, but EURJPY largely holding above overnight. More: EURUSD Is Testing 1.3100 Resistance From Where Price Could Retrace To 1.2900/50

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