After having softened considerably against all 16 of its major peers, the Yen has gained a little support from a speech given by Bank of Japan Governor Haruhiko Kuroda at a central bankers meeting. Sterling, meanwhile, has gradually depreciated on Monday after mixed data regarding house prices.
The Pound Sterling to Japanese Yen exchange rate is currently trending in the region of 172.4100.
Over the past three days the Yen has fallen against all of its major peers amid speculation that the pension fund is moving towards boosting its holdings of stocks and overseas assets. A report from a Japanese newspaper raised concerns that the Government Pension Investment Fund (GPIF) will raise its target for foreign bonds and shares to about 30%, up from 23%.
‘The fact that they’ve put numbers on the reallocation implies that they’re closer to implementing it and the flows actually occurring,’ said Sam Tuck, a senior currency strategist at ANZ Bank New Zealand Ltd. in Auckland, referring to GPIF. ‘Markets will be looking at those flows as supportive for equity markets and outflows from Japan, which would both be negative for the Yen based on current correlations.’
Sterling has generally trended lower against the majority of its most traded peers after Bank of England Deputy Governor Andy Haldane reported that a sooner-than-expected benchmark rate hike is not on the cards. Haldane argued that the slow pace of wage growth, inflationary issues and global economic disparity will hold back the normalisation on monetary policy.
The Pound Sterling to Japanese Yen exchange rate has fallen to a low today of 172.2200.
Despite lingering concerns over the GPIF, the Yen is slowly recovering after BoJ Governor Kuroda reported in a quarterly report that the Japanese economic recovery is still on track. ‘As for the outlook, the economy will continue to recover moderately as a trend, with the effect (of the sales tax hike likely to gradually subside,’ Kuroda said on Monday.
‘Domestic demand is firm as job and income conditions steadily improve,’ the October report said.
However, Monday’s mixed Japanese data (which errs towards the negative) has slowed the pace of the Yen recovery. The Coincident Index declined from 108.5 to 108.3, the Leading Index grew from 104 to 104.4, the Nationwide Department Store Sales fell from -0.3% to -0.7%, the Tokyo Department Store Sales dropped from 1.3% to 0.5% and Convenience Store Sales gained from -2.4% to -1.3%. .
The Pound has steadily depreciated a little on Monday after house price data produced mixed results. On a yearly basis, Rightmove House Prices dropped from 7.9% to 7.6%, but gained on a monthly basis from 0.9% to 2.6% in October.
Pound to Japanese Yen Exchange Rate Forecast to Soften
Monday’s economic calendar is relatively sparse so market volatility is likely to be reasonably minimal. As traders digest the quarterly report from the Bank of Japan it is likely that the GBP/JPY exchange rate is likely to continue to soften over the course of Monday.
The Pound Sterling to Japanese Yen exchange rate has reached a high today of 173.000.
UPDATE
The Pound Sterling to Japanese Yen exchange rate is currently trending in the region of 172.0863.
The Japanese Yen has strengthened fractionally against the Pound on Tuesday morning after domestic data provided good results. The All Industry Activity Index was forecast to soften from -0.2% to -0.4%, but the actual result showed a growth to -0.1%.
However, the gains are likely to be slow and short-lived after two Japanese cabinet ministers resigned on Monday. The resignation of the two female ministers, which includes the high-profile traded and industry minister could be a major setback for Prime Minister Shinzo Abe. The resignation was in protest over the dubious use of political funds.
Meanwhile, Sterling has softened a little on Tuesday morning ahead of public finances data due for publication later on Tuesday morning.
Japanese Yen (JPY) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Japanese Yen,
,US Dollar,0.0093,
Japanese Yen,,Euro,0.0073,
Japanese Yen,,Pound,0.0057,
Japanese Yen,,Australian Dollar,1.1147,
US Dollar,,Japanese Yen,107.1235,
Euro,,Japanese Yen,136.6507,
Pound Sterling,,Japanese Yen,172.6244,
Australian Dollar,,Japanese Yen,93.8636,
[/table]
