Wednesday, 16 January 2013

Yen Holds Two-Day Rally as Investors Weigh BOJ Stimulus Chances

By Monami Yui & Hiroko Komiya - Jan 17, 2013 7:59 AM GMT+0400

The yen remained higher after a two- day rally as investors weighed the likelihood of new monetary easing measures by the Bank of Japan (8301) next week.
The Japanese currency advanced against most major peers as Asian stocks reversed gains, supporting demand for safer assets. It rallied over the past two days after comments by Japanese officials damped expectations the government will push for further declines.Australia’s dollar weakened after data showed the nation lost jobs in December.
Jan. 16 (Bloomberg) -- Jens Nordvig, managing director of currency research at Nomura Securities, talks about the outlook for the Swiss franc, the yen and the euro. Nordvig speaks with Tom Keene and Scarlet Fu on Bloomberg Television's "Surveillance." Jonathan Golub, chief U.S. market strategist at UBS Securities LLC, also speaks. (Source: Bloomberg)
Jan. 15 (Bloomberg) -- Carlos Ghosn, chief executive officer of Nissan Motor Co., talks about the company's Infiniti brand, business strategy and partnership with Daimler AG. He speaks with Matt Miller at the 2013 North American International Auto Show in Detroit on Bloomberg Television's "In the Loop." (Source: Bloomberg)
“The yen is in the tug-of-war situation,” said Minori Uchida,Tokyo head of global market research at Bank of Tokyo- Mitsubishi UFJ Ltd. “We’re seeing expectations for a weaker currency and also official comments against that view ahead of the BOJ meeting.”
The yen rose 0.1 percent to 88.27 per dollar at 12:52 p.m. in Tokyo, after gaining 1.2 percent over the previous two days. It sank to 89.67 on Jan. 14, the lowest since June 2010. The yen rose 0.2 percent to 117.25 per euro, reversing from a decline of as much as 0.6 percent. The euro slid 0.1 percent to $1.3282.
The MSCI Asia Pacific Index of regional shares slid 0.4 percent after rising as much as 0.6 percent today.
BOJ Governor Masaaki Shirakawa, who’s due to step down in April, and his fellow board members will review the central bank’s inflation goal at their Jan. 21-22 meeting. Prime Minister Shinzo Abe has called for the target to be doubled to 2 percent and said on Jan. 13 that he wants a BOJ chief “who can push through bold monetary policy.”

Buy Rumor

“We expect the yen to strengthen modestly further in the near term,” Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia (CBA), the nation’s largest lender, wrote in a research note today. “There may be a ‘buy the rumor, sell the fact’ reaction whereby the yen strengthens after the BOJ announces its easing measures.”
CBA recommended using rallies in the yen as an opportunity to short the currency, targeting it to decline to 96 per dollar, Capurso wrote.
Asian Development Bank President Haruhiko Kuroda is the “No. 1 candidate” for governor, according to a research note today by Masaaki Kanno, the chief economist in Tokyo at JPMorgan Securities Japan Co. Kuroda advocated unlimited monetary easing in a seminar in Tokyo on Jan. 11.
Japan’s tertiary index fell 0.3 percent in November from a month earlier, when it decreased 0.1 percent, the Ministry of Economy, Trade and Industry said today.

Yen Rally

Economy Minister Akira Amari said on Jan. 15 that an excessively weak currency may drive up import costs and hurt households. The Nikkei newspaper yesterday quoted Shigeru Ishiba, secretary general of the ruling Liberal Democratic Party, as saying yen depreciation may trouble some industries.
“Investors may have used those comments from the lawmakers just to adjust their positions,” said Junichi Ishikawa, an analyst at IG Markets Securities Ltd. in Tokyo. “The expectation for BOJ stimulus is keeping yen weakness intact.”
The yen has tumbled 12 percent over the past three months, making it the worst performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has added 0.3 percent and the euro has risen 1.6 percent.
In Australia, employment fell by 5,500 in December, government data showed today. That compared with economist estimates for a 4,000 increase.
“Domestically, the economy does not look that strong,” said Thomas Harr, head of Asia local markets strategy at Standard Chartered Plc in Singapore. “In the very, very short term, there’s a risk to the downside for the Aussie.”
The so-called Aussie lost 0.6 percent to $1.0509. It touched $1.0599 on Jan. 10, the strongest since Sept. 14.
To contact the reporters on this story: Monami Yui in Tokyo at
Hiroko Komiya in Tokyo at
To contact the editor responsible for this story: Rocky Swift at