Japanese yen continues to maintain much of its earlier strength today, heading higher against many of its major counterparts. Yen is gaining as a better outlook contributes to the idea that more easing will not be necessary for the Japanese economy.
Business conditions are showing improvement, according to MOF’s BSI Business Conditions indicator. There are indications that the policy of pursuing weakness might be reduced to some degree, thanks to the latest indications that Japan’s economy might be ready to pick up.
The Bank of Japan has been aggressively employing tactics designed to ease its currency in an effort to spur economic growth. A weaker currency makes Japan’s exports more desirable in global trade, and the easier money is meant to boost inflation and growth. This has meant yen weakness. However, with things possibly changing, the yen is showing strength. This is especially true against the euro. ECB officials and other eurozone leaders are interested in aggressively promoting growth, which means policy divergence from many major economies.
As a result of all the changes, the yen is stronger today, and might see more strength down the road.
At 14:14 GMT USD/JPY is down to 102.0600 from the open at 102.3525. EUR/JPY is down to 138.0825 from the open at 138.6620. GBP/JPY is also lower, dropping to 171.2125 from the open at 171.5050.
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