The Japanese Yen continues to weaken slowly to new 32-year lows, and Japanese Cabinet Secretary Matsuno Threatens Action
- The Japanese Yen has continued to weaken slowly in line with the long-term trend that has seen it lose about 30% of its relative value over the past year. The key USD/JPY currency pair touched ¥149 during today’s Tokyo session. Despite intervening when the price was near ¥145, there is no sign yet of the Bank of Japan intervening to prop up the Yen, although there is a lot of speculation that the Bank will do so if ¥150 is touched or exceeded. Japan’s Cabinet Secretary has threatened to take “appropriate steps” and has stated that the FX market is being “watched closely”, signalling there may well be intervention if the Yen continues to weaken.
- The new British Chancellor (finance minister) Jeremy Hunt yesterday completed the reversal of the unfunded tax cut package proposed by the previous Chancellor Kwarteng, and he also spoke about making spending cuts to balance the remaining $33 billion gap. These actions seem to have impressed markets, with stock markets and the GBP/USD currency pair rising firmly during the Asian session following the announcement, with S&P 500 Index futures now trading above 3750.
- In the Forex market, the US Dollar and the Japanese Yen are currently the weakest major currencies, although in the case of the Dollar this is against the trend and is prone to reversal, while the Yen has regained a little strength against the Dollar in recent hours. The New Zealand Dollar is currently the strongest major currency.
- There will be releases today of British and Canadian CPI (inflation) data, which will be closely watched by the market.
- New Zealand inflation data released yesterday showed an overshoot, with a quarterly CPI increase of 2.2% compared to the expected 1.5%, pushing up the inflationary outlook for New Zealand.
- The Bank of England has announced it will delay its planned quantitative tightening until the gilt market has calmed.
- China has delayed its scheduled release of GDP data. It is rumoured that this is due to poorer than expected numbers.
- Daily new coronavirus cases globally fell slightly last week.
- It is estimated that 68.3% of the world’s population has received at least one dose of a coronavirus vaccination, while approximately 8% of the global population is confirmed to have contracted the virus at some time, although the true number is highly likely to be much larger.
- Total confirmed new coronavirus cases worldwide stand at over 630.3 million with an average case fatality rate of 1.04%.
- The rate of new coronavirus infections appears to now be significantly increasing only in Germany, Italy, and Singapore.