The Yen slipped close to a 5-year low versus its main competition, i.e. the U.S. Dollar and the common currency Euro, a victim to whetted risk appetite which gave Wall Street a solid boost to fresh highs and which put pressure on low yielding currencies like the Yen. Though Asian trade continues to be thin as the year end approaches, it is merely a continuation of the downward momentum the Yen has been subjected to as a result of the combined monetary and fiscal policies of the Japanese government in an attempt to revive the stagnant Japanese economy. The release earlier of consumer inflation data in Japan to 1.5% in November, the highest seen in five years, is viewed as further support of the BOJ’s currently ultra loose monetary policy.
As reported at 10:04 a.m. (JST) in Tokyo, the USD/JPY pair traded at 104.81 Yen, only a few pips away from the session high, while the EUR/JPY eased to 143.47 Yen, edging off a session peak of 143.57 Yen, a level last seen in October 2008. Analysts believe the USD/JPY pair is likely to hit 105.00 Yen before the end of the year, and expectations that the Federal Reserve Bank is likely to continue scaling back its asset purchasing scheme is giving the greenback a relative bounce.
Pound Sterling Advances on Greenback
While the U.S. Dollar rose broadly against the commodity linked currencies like the Aussie and Kiwi Dollars, it was under pressure against its key rival across the pond, i.e. the British Pound. The recent release of surprisingly upbeat mortgage data gave rise to increased speculation that the Bank of England might opt for an interest rate hike sooner than expected. The GBP/USD pair traded at a 1½-week peak $1.6438 before easing back to $1.6408.