The US dollar was little changed this morning against most other majors. The only exception was some significant weakness against the Japanese yen. The USD/JPY fell below 161.30 overnight to hit its lowest level since this time last week. But bear in mind that it came close to a fresh forty-year high on Wednesday.
Source: TN Trader
The Japanese yen found some support following comments from Finance Minister Satsuki Katayama. She said that the government intends to encourage pension funds to increase investments in domestic financial assets. Analysts believe this strategy could provide more durable support for the yen than direct market intervention. The news helped to steady the Japanese bond market as yields fell.
Ms Katayama also said that she expected the Bank of Japan to raise interest rates gradually, even as the government pushed ahead with planned tax cuts and spending. So, the yen is up without the big, unwieldy stick of intervention. But it needs to build some upside momentum now. Otherwise, intervention, along with the risk of an unruly unwinding of the yen carry-trade, remains a real danger.
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