Yen crumbles as Abe calls for sub-zero interest rates
City Index November 15, 2012 2:12 PM
<p>The most notable mover overnight was EUR/JPY, following the latest news in the Japanese election saga. The cross rallied from 102.14 to 103.19 following news […]</p>
The most notable mover overnight was EUR/JPY, following the latest news in the Japanese election saga. The cross rallied from 102.14 to 103.19 following news the Liberal Democrat leader Shinzo Abe has called for unlimited easing by the Bank of Japan. In a speech yesterday, Abe advised that if he was successful in his campaign, he would call for the BoJ to revise the inflation target from 1% to 3% and cut benchmark interest rates to zero, if not lower. USD/JPY reached a seven-month high of 80.93, the highest level since 26th April 2012.
FOMC minutes published last night revealed the Fed may replace Operation Twist (set to expire by the end of December) with conventional quantitative easing. The recent re-election of President Obama has significantly increased the chances of Fed boss Bernanke defending his post till early 2014. Although the minutes did assign a significant amount of detail linking Fed policy to unemployment targets, overall there was nothing groundbreaking or particularly positive to report. The euro temporarily bounced on the minutes release, before moving lower and printing an overnight low of 1.2715 against the dollar.
A jam-packed day on the data front today, kicking off with slightly stronger French and German preliminary GDP. At 9am we have the ECB monthly bulletin, followed by UK retail sales at 9.30am – forecasted at -0.1%. At 10am eurozone CPI data is released, with US CPI at 1.30pm. The focus, however, will be on US unemployment claims also at 1.30pm and Philly Fed manufacturing figures at 3pm.
Supports 1.2690| Resistance 1.2825
Supports 79.80 | Resistance 81.40
Supports 1.5825 | Resistance 1.5912
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.