The USD/JPY hit a recent low on Monday and is trading at 101.54 in the green this morning as global tensions in the Ukraine and violence in Libya continued to stress traders. As traders looked for safety the yen appreciated. This was then supported by comments from the Bank of Japan which seems to be indicating that there is no stimulus forth coming. The BoJ will begin its two day meeting today. The yen held near a 3 1/2-month high against the dollar and the euro on Tuesday, supported by diminishing expectations of stimulus by the Bank of Japan as well as falling U.S. and European bond yields.
The chart break was a talking point among yen traders given the dollar has not held below that average except for brief forays in October-November last year. The dollar has largely been in a strong position since late 2012 when Japanese Prime Minister Shinzo Abe’s embarked on aggressive fiscal and monetary easing to revive growth. As a result a sustained fall below that mark may portend a turning point in the yen’s weakening trend.
Growing tensions in the Ukraine, Vietnam and now Thailand are keeping traders in risk off mode benefiting the JPY. That boosted buying of the yen, seen as a safe haven during times of uncertainty or turmoil. “The yen has been in demand, mainly due to unstable risk sentiment and falling expectations of the Bank of Japan considering a more aggressive monetary policy stance anytime soon,” Credit Agricole said.
On Friday, data showed US housing starts jumped a stronger-than-expected 13.2 percent in April, although the jump was driven by construction in the often-volatile multi-unit sector, while consumer confidence weakened.
Traders are now looking to Wednesday’s release of minutes from the Federal Reserve’s April 29-30 policy meeting, with Credit Agricole saying they “will be closely scrutinized for potential evolution of forward guidance as well as for clues on the monetary policy path going forward”.