Yen Advances As BoJ Lowers Bond Purchases, Asian Shares Weaken
February 27 2018 - 8:49PM
RTTF2
The Japanese yen spiked up against its major opponents in the
Asian session on Wednesday, as the Bank of Japan slashed long-term
bond purchases, while hawkish comments from Fed Chair Jerome Powell
and weak China data sent investors scurrying to safe-haven
assets.
The BoJ cut the purchases of long-term bonds to 70 billion yen,
compared to 80 billion yen it bought at its previous operation.
Powell laid out a case for a faster pace of interest-rate
increases, saying that further gradual increases in interest rates
would be appropriate to attain objectives of maximum employment and
stable consumer prices.
Powell's Congressional testimony was seen as indicating that the
Fed may raise interest rates more than the three times currently
anticipated.
Traders reacted to weak manufacturing data from China, with the
official gauge of manufacturing growth hitting its lowest level in
19 months due to Spring Festival holiday closures. Industrial
output, housing starts and retail sales figures from Japan also
disappointed investors.
Data from the Ministry of Land, Infrastructure, Transport and
Tourism showed that Japan's housing starts logged a double-digit
decline at the start of the year.
Housing starts decreased 13.2 percent year-on-year in January,
faster than the 2.1 percent drop in December and the expected 4.7
percent decrease.
The yen advanced to a 5-day high of 148.69 against the pound,
from a low of 149.52 seen at 7:15 pm ET. If the yen rises further,
144.00 is possibly seen as its next resistance level.
The yen climbed to a 5-1/2-month high of 130.81 against the euro
and a 2-day high of 113.86 against the Swiss franc, off its early
lows of 131.52 and 114.44, respectively. The next possible
resistance for the yen is seen around 128.00 against the euro and
112.00 against the Swiss franc.
The yen strengthened to more than an 8-month high of 83.78
against the loonie, after falling to 84.19 at 7:15 pm ET. The yen
is likely to find resistance around the 82.00 level.
The yen hovered around near a 3-month high of 77.41 against the
kiwi, from an early low of 77.81. Against the aussie, the yen rose
to a 5-day high of 83.38, from an early low of 83.81, and held
steady thereafter. The yen is seen finding resistance around 75.00
against the kiwi and 82.00 against the aussie.
Reversing from an early low of 107.53 against the greenback, the
yen edged up to 107.00. On the upside, 106.00 is seen as the next
resistance level for the yen.
Looking ahead, Swiss KOF leading indicator, German jobless rate
and Eurozone CPI - all for February are due in the European
session.
In the New York session, Canada industrial product price index
for January, U.S. GDP data for the fourth quarter and pending home
sales for January are scheduled for release.
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