2 Feb 2015
Global growth concerns continue to benefit Yen – BTMU
FXStreet (Barcelona) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, comments that building global growth concerns and more risk-averse trading conditions has led the Japanese Yen to strengthen and decreased the certainty of further BoJ easing in the near-term.
Key Quotes
“The yen has strengthened so far this year in response to building investor concerns over slowing global growth which has resulted in more risk-averse trading conditions.”
“Those concerns were reinforced overnight by the release of the weaker than expected HSBC China manufacturing PMI survey for January. The survey revealed that business confidence in the manufacturing sector remained weak at 49.7 in January which was the second consecutive reading below the 50.0-level.”
“The price of iron ore and copper which are closely linked to demand from China have also continued to weaken so far this year with both declining by just over 10%.”
“As a result commodity-linked currencies such as the Australian, New Zealand, and Canadian dollars are all underperforming reflecting the ongoing deterioration in their country’s terms of trade. The negative impact on their economies is also prompting building expectations of monetary easing further reinforcing currency weakness.”
“Even the US economy which has been outperforming lost some growth momentum towards the end of last year.”
“The yen is also trading on firmer footing reflecting the reduced likelihood of further monetary easing from the BoJ in the near-term."
"It appears that the government is now placing less pressure on the BoJ to meet its inflation target as soon as possible in the current environment whereby inflation is depressed temporarily by the sharp decline in commodity prices. BoJ monetary easing is already very aggressive.“
Key Quotes
“The yen has strengthened so far this year in response to building investor concerns over slowing global growth which has resulted in more risk-averse trading conditions.”
“Those concerns were reinforced overnight by the release of the weaker than expected HSBC China manufacturing PMI survey for January. The survey revealed that business confidence in the manufacturing sector remained weak at 49.7 in January which was the second consecutive reading below the 50.0-level.”
“The price of iron ore and copper which are closely linked to demand from China have also continued to weaken so far this year with both declining by just over 10%.”
“As a result commodity-linked currencies such as the Australian, New Zealand, and Canadian dollars are all underperforming reflecting the ongoing deterioration in their country’s terms of trade. The negative impact on their economies is also prompting building expectations of monetary easing further reinforcing currency weakness.”
“Even the US economy which has been outperforming lost some growth momentum towards the end of last year.”
“The yen is also trading on firmer footing reflecting the reduced likelihood of further monetary easing from the BoJ in the near-term."
"It appears that the government is now placing less pressure on the BoJ to meet its inflation target as soon as possible in the current environment whereby inflation is depressed temporarily by the sharp decline in commodity prices. BoJ monetary easing is already very aggressive.“