[B]Market Review - 18/02/2013 22:35 All times in GMT
Japanese yen drops broadly after Japan signals no change to monetary policy[/B]
The Japanese yen dropped against the dollar on Monday after weekend’s G20 communique did not signal out Japan as the currency manipulator. Expectation on the Bank of Japan to implement further monetary measures increased after comments from Japanese Prime Minister Shinzo Abe also gave a lift to the usd/jpy pair in early Asian trading before easing as market condition was thin due to U.S. President’s Day market holiday.
Earlier, dollar found support at 93.62 at New Zealand open after the weekend Group of 20 nations meeting avoided singling Japan out for criticism over policies that have led to a recent sharp decline in the yen. The G20 pledged to ensure that monetary policy is focused on price stability and growth, rather than on weakening currencies, following a weekend summit meeting in Moscow. Later, ‘yen-bearish’ comments from Japanese Prime Minister Shinzo Abe in Asian morning gave a boost to the usd/jpy and the pair rose to 94.22, near last Monday’s 33-month peak at 94.46, however, lack of follow through buying prompted profit taking in post-Tokyo lunch trading and the pair retreated to 93.85, then 93.76 in European afternoon before stabilising.
Japanese Prime Minister Shinzo Abe told Parliament Monday that ‘buying foreign bonds, measures to directly affect stock market could be among future options for BOJ; must consider revising BOJ law guaranteeing centre bank’s independence if BOJ cannot achieve results in eyeing 2%; want to reflect government’s determination in beating deflation via nomination of new BOJ governors, deputy governors which likely to be made soon; BOJ’s monetary easing is aimed at beating deflation, not at manipulating fx market and weakening yen; correcting excessive yen rises would be appropriate policy direction.’
The single currency traded broadly sideways in an otherwise lackluster session Monday after moving narrowly in Asia. The pair edged lower to 1.3322 before staging a brief but sharp bounce to session high of 1.3379 in European morning in part due to active cross-buying in euro, especially versus the yen. Eur/jpy extended Friday’s rally from 122.90 to 125.90 before retreating. The single currency later dropped back to around 1.3333 in European afternoon as ECB’s President Mario Draghi’s warned that the euro zone economy is still weak and that the economic outlook remains to the downside.
ECB’s President Mario Draghi spoke at a quarterly hearing on the ECB at European Parliament’s Economic and Monetary Affairs Committee in Brussels on Monday and said that Europe ‘entered 2013 in a more stable financial environment than in recent years’, but warned that the economy is still weak following three quarters of contraction and will only recover slowly this year.
The British pound fell below last Friday’s low at 1.5462 to a fresh 7-month trough at 1.5438 against the dollar on Monday due to sterling-bearish comments by BoE policymaker Martin Weale over the weekend together with Friday’s unexpectedly weak U.K. retail sales data, which fuelled concerns over the economic outlook. Weale said in a speech delivered at the Warwick Economics summit on Saturday that sterling may need to weaken further in order to rebalance Britain’s economy. However, intra-day short-covering lifted price later in the day and cable rose in tandem with euro to 1.5508 in European afternoon before retreating, came edged lower to 1.5459 near European closing.
[B]Data to be released on Tuesday : [/B]
RBA relases Feb minutes; Japan leading indicators, Germany ZEW economic sentiment, ZEW current conditions, U.S. NAHB housing mrkt index.