Mid-Day Report: Yen Weakens as Consolidation Continues

Yen weakens again today with USD/JPY back above 100 level after dipping to 98.85 earlier this week as consolidative trading continues.

 

EUR/JPY and GBP/JPY also recover and is back above 131 and 153 respectively.

 

Dollar also pared some of the post ISM manufacturing losses. While the manufacturing data disappoint, the ISM services data and non-farm payroll to be released later this week are more important.

 

In particular, employment data will be important for Fed to determine when to taper its asset purchase.

 

The RBA left the cash rate unchanged at 2.75%, the lowest level in 50 years, as policymakers assess the impacts of previous cuts.

 

The central bank has reduced the policy rate by -200 bps since November 2011. Policymakers reiterated that the stance of monetary policy remains appropriate for the time being. They also noted that while the exchange rate has depreciated since the last meeting, it remains too high for exports to stay competitive.

 

The Australian dollar has dropped modestly against the US dollar after the announcement.