The yen has been quietly appreciating over the past week and overnight has touched key levels on USDJPY and elsewhere. Dollar yen is sitting just above the 200 day moving average at 101.23, with support also noted at previous lows at 101.24/21. It’s noticeable that Japanese stocks have underperformed other major indices over the past two weeks, with this normally being associated with a firmer yen. It’s also notable that EURJPY has broken decisively below the 140 level for the first time since early February. This has also been helped by the underlying expectation that we are likely to see some action from the ECB at next month’s policy meeting. This is unlikely to put severe downward pressure on the euro, but will give it a negative under-current in the run-up to the meeting on the 5th of June.
For today, there are no major data releases for the FX markets to get their teeth into. There are various ECB speaks scheduled for this week, which could keep the single currency sensitive to changing sentiment regarding both the euro and the policy outlook. The minutes to the May BoE MPC meeting will also be released and will be of interest for signs of greater dissent amongst the committee. Note that the Bank of England governor made more pointed warnings regarding the risks from the housing market over the weekend. Whilst this did not impact sterling, it was a further sign that there are risks with continuing with low rates, but it falls to others (government, financial policy committee) to more directly deal with them.
Further reading:
GBP/USD: Trading the British CPI
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