Yen dips on CPI data and Govt. comments
Currency traders quickly moved the Japanese Yen firmer, on the opening of the Asian trading session, to 115.55. But then just as swiftly took the shine off the Japanese currency on the release of core CPI data and comments from Japanese Finance Minister Sadakazu Tanigaki to send the USD/JPY to 116.45. Japanese January core CPI rose 0.5 pct year on year, it had been expected to rise 0.4 pct. This was the third consecutive monthly increase. January spending by households headed by salary earners fell 4.7 pct. January unemployment rate rose to 4.5% from 4.4% in December, the forex markets had expected 4.4%. The CPI rise was the fastest monthly jump in consumer prices since 1998, this boosted the view that the central bank had a good case for cutting the amount of money it pumps into the economy. Japanese Finance Minister Sadakazu Tanigaki called for restraint from the Bank of Japan in ending policies to fight deflation.. The government and the Bank of Japan need to cooperate to ensure ``there isn't a relapse,'' Tanigaki said after today's report. This gave the fx markets enough doubt about the Bank of Japan’s intentions next week to take profits and cut back positions. A move back to 117.20 should not be discounted with a small amount of resistance at 116.80.
The Euro is opening the European trading session around the 1.2020 after seeing a high of 1.2043 in Asian trading. A pull back towards 1.1980 on profit taking and position squaring ahead of the weekend should not be ruled out.
The Swiss Franc touched a high of 1.2970 before the move back to the US Dollar by fx traders overnight. Profit taking back to 1.3040 and 1.3065 are within the bounds of possibility for short term traders.
After touching a high of 1.7547, GBP/USD has backed off to 1.7520. Losses should be limited to 1.7490 ahead of the weekend.
The Canadian Dollar sits at 1.1320 on the European opening, having seen a new high for the loonie of 1.1297. Continued strength seems to be the order of the day with any pullbacks limited to 1.1340
