In similar fashion to the British pound, traders are focusing their attention on the release of the Bank of Japan meeting minutes. With all the hype surrounding carry trade speculation, short yen traders will surely be scrutinizing for any further indications of a pre-emptive move on inflationary pressures in the world?s second largest economy.
Although the potential does remain, the likelihood continues to be a far off scenario as policy makers have little to go on as far as a definitive move towards monetary tightening. Domestic spending, although improving, remains in the cellar for the Japanese economy, helping to keep consumer prices lower in the face of rising global oil prices. With growth also lower than expected, marking at 2.4 percent against expectations of a repeat 5 percent from the year before, policy makers are sure to keep a higher interest rate in the back of their minds, at least for now. The notion should keep the yen moving lower against higher yielders, including the US dollar, barring any liquidation in Shanghai.