Forex: USD/JPY – Yen at 2-week high on bullish CPI

Written by: Violina Todorova
July 26, 2013 Friday July 26th:_ The yen has rebounded strongly against the greenback since the start of the day’s American trading, with the pair falling to a two-week low at 98.25, to be down 109 pips so far intraday.

The yen strengthened today as the biggest jump in Japanese consumer prices in five years dampened speculation that Japan will need to expand fiscal stimulus.
The CPI for July came out as a rise of 0.2 percent y/y, following the prior month’s negative 0.3 percent growth and recording the highest monthly gain since June 2008.
CPI excluding fresh food came out as a 0.4 percent rise in June, above expectations for a 0.3 percent increase and up from June’s flat reading.

Niels Christensen, chief currency strategist at Nordea Bank AB in Copenhagen, observed: “We had the inflation data in Japan which was a bit higher than expected and that’s reducing expectations of further monetary easing and giving a lift to the yen.”
The yen also got a leg up against the US dollar yesterday on a fall in Asian and European equities, boosting demand for safe-haven currencies.

And the release yesterday of Japan’s Foreign Bond Investment data for last week showed that resident investors bought ¥549.3 billion of foreign bonds in the week, as against the prior week’s ¥1.1056 trillion – the largest outlay since September 2012. Foreign investment in Japan stocks recorded ¥349.8 billion for the week, down on the prior week’s ¥398.2 billion.

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