27 Jun 2013
Flash: Q1 GDP downgrade weighs upon US dollar - BTMU
FXstreet.com (London) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ notes that the US dollar has continued to correct lower in the Asian trading session following the unexpectedly sharp downward revision to the final Q1 US GDP report.
Additionally he notes that weaker than expected growth in Q1 is helping at least temporarily to reassure investors that the Fed may consider delaying QE tapering. Further, he notes that the yen has been one of the main beneficiaries of the recent pick up in financial market volatility which has prompted investors to scale back yen funded carry trades. He notes that the more favourable financial market conditions overnight have seen the yen re-weaken, and writes, “Still the latest weekly securities transactions report from the MoF again revealed no evidence that Abenomics is leading to Japanese investors to increase exposure to foreign assets. The report revealed that Japanese investors sold a sizeable net JPY1.19 trillion of foreign bonds in the week ending the 21st June amidst the broad sell off in global fixed income bringing cumulative net sales of foreign bonds in 2013 to around JPY9.25 trillion.”
Additionally he notes that weaker than expected growth in Q1 is helping at least temporarily to reassure investors that the Fed may consider delaying QE tapering. Further, he notes that the yen has been one of the main beneficiaries of the recent pick up in financial market volatility which has prompted investors to scale back yen funded carry trades. He notes that the more favourable financial market conditions overnight have seen the yen re-weaken, and writes, “Still the latest weekly securities transactions report from the MoF again revealed no evidence that Abenomics is leading to Japanese investors to increase exposure to foreign assets. The report revealed that Japanese investors sold a sizeable net JPY1.19 trillion of foreign bonds in the week ending the 21st June amidst the broad sell off in global fixed income bringing cumulative net sales of foreign bonds in 2013 to around JPY9.25 trillion.”