The US Dollar edged up versus the Japanese Yen in light FX trade as a result of holidays throughout Asia and Europe. In the last week of 2016, the trend continues to be for a broadly stronger Dollar, despite the setback in the days before Christmas which suggested that Euro parity and a 120 Yen level would likely be seen in the coming year. Bankers in Europe are watching to see if there is a squeeze in the price banks pay to borrow greenbacks, i.e. cross currency basis, which is relative to other foreign currencies. Those costs have been on the rise and could offer some support to the greenback over the next several days.
As reported at 11:00 am (GMT) in London, the USD/JPY was trading at 117.292 Yen, a gain of 0.16%; the pair has ranged from a session trough of 117.04 Yen to a peak of 117.45 Yen. The EUR/USD was trading at $1.0452, a gain of 0.02%; the pair’s daily range was from $1.0429 to $1.0459.
Little Impact on Yen Despite CPI Reading
The Japanese Yen remained steady even after the release of Japan’s National CPI reading for November which showed the 9th consecutive month of declines (on an annual basis). Japan’s Core CPI also feel in November. Since the beginning of November, the yen has lost nearly 20% of its value against the Dollar, though analysts believe that worries over the incoming US President and a possible rocky relationship with China could provide the safe haven Yen with a boost in 2017.