With emerging markets beginning to stabilize the Japanese Yen eased off of the recently struck multi-month peaks though currency strategists are still hesitant to go long on the USD/JPY pair waiting instead for stronger affirmation that the risk environment has improved. Meanwhile, the Australian Dollar’s recent rally paused following the decidedly hawkish posturing of the Reserve Bank of Australia at its latest policy setting meeting.
As reported at 12:40 p.m. (JST) in Tokyo, the USD/JPY pair traded at 101.45 Yen, a loss of 0.2%for the greenback while the EUR/JPY dipped 0.3% lower to trade at 137.03 Yen. Earlier in the trading session, the pairs had dropped to 100.76 Yen and 136.25 Yen, respectively, both at fresh 11-week lows. The AUD/USD had gained 2% on the RBA news but eased back to $0.8886 while the AUD/JPY traded at 90.14 Yen, a loss of 0.6% which followed a 2.7% rally on Tuesday, the largest single day’s gains in about 10 months.
FX Markets Await Draghi’s Decision
The EUR/USD dipped to $1.3511 and held close to the recently struck 2-month trough at $1.3477 as FX players focus on what the European Central Bank might now be inclined to do. The ECB meets tomorrow and a consensus of analysts polled believes that Mario Draghi, the ECB head, could set a more dovish tone and hint at more easing in the works given the looming likelihood that the deflationary trend will continue for the Eurozone.