There’s a great deal of optimism going around the financial markets right now, and that means that there isn’t much need for the Japanese yen. With good news out of the United States, and remarks from Japanese leaders indicating that more easing could be on the way, the yen is well-positioned to retain much of its weakness in Forex trading.
Yen is usually seen as a safe haven currency that Forex traders turn to when they are worried about the state of the global economy. However, right now there are fewer fears about what’s next, since the US economy appears to be recovering. Ben Bernanke expressed his opinion that the US economy is recovering, and that moderate growth is expected over the next few quarters. This is reducing the need for easing in the United States.
At the same time, though, Bank of Japan governor Masaaki Shirakawa indicated that deflation might be an issue in Japan. Even though the BOJ decided not to ease this time around, there is the expectation that Japan could see more monetary easing in the near future in the hopes of boosting Japan’s flagging economy. This would also have the effect of keeping the yen weaker against the US dollar.
At 13:20 GMT USD/JPY is up to 83.5700, up from the open at 82.8800. EUR/JPY is also higher at 109.1810, up from the open at 108.4250.
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