Yen Weakens Against The Dollar
IFC Markets | Jan 14, 2014 09:57AM ET
The last week trends have been remained in the currency market on Monday. The Japanese yen decreased on the chart, by 1.1% to its lowest level in a month at 102.85 yen per U.S. dollar. In our opinion, some investors closed short positions being influenced by the negative Friday data from the U.S. labor market. So, the yen decline was likely speculative. The economic data Japan came out last night. Current account deficit in November exceeded forecasts and increased to the highest level since 1985 (592.8 billion yen), ($ 5.7 billion). This was due to an increase in imports of hydrocarbons after the closing of a number of Japanese Atomic Power Stations.Increase in the influenced weakening of the yen today.
An additional factor was the announcement of a major transaction where is the necessity to convert yen into dollars. The Suntory Holdings Ltd. - Japanese manufacturer of alcoholic beverages purchases the Beam Inc. for $ 16 billion, it owns brands such as Jim Beam and Canadian Club. Besides all of this, weakening of the yen was also due to the message of continuation of buying the U.S. government bonds by the Japanese government. The total amount for November was 1.48 trillion yen ($ 14.7 billion). Japan is buying U.S. bonds for five consecutive months for the first time in the past two years.
Today at 9-30 GMT we expect a series of macro indicators from the UK. We believe that the most significant of these can be the consumer price index for December, calculated month to month. It is expected to grow by 0.5%. The inflation increase may be negative for the pound
At 13-30 GM, in the US, there are the most important retail sales data for December coming out. In our opinion, the preliminary forecasts are negative for the U.S. dollar. It should be noted that this is not all news for today. After macroeconomic information, the market expects another event that may be positive, on the contrary. We expect the bank executives performances, Philadelphia Fed in 17-45 GMT and Dallas at 18-20 GMT. Previously, they stated of necessity for further reductions in asset. This supports the U.S. dollar exchange rate.
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The Australian dollar now slightly corrected after its rapid growth. Investors are taking profits on anticipation of weak economic statistics from China. Tomorrow morning, there will be information on the volume of new loans in RMB in December. According to preliminary estimates it will decrease to 570 million yuan. China is a major trading partner of Australia.
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