The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥92.75 level and was supported around the ¥91.90 level. In the absence of major news, traders continue to square their books at year-end and react positively to dollar-supportive U.S. economic data.Ongoing doubts concerning Japan Airlines and the company’s possible bankruptcy are having a negative impact on the yen. Standard & Poors warned Japan’s “AA” credit rating could be lowered if Japan fails to stabilize its debt levels.
The Japanese government released a long-term strategy overnight that aims to achieve GDP growth of an average 2% over the next decade. Data released in Japan overnight saw December PMI improve to 53.8. Minutes from Bank of Japan’s latest Policy Board meeting were released last week in which the government asked the central bank to monitor deflation. The minutes revealed “many” Policy Board members agreed “the bank would maintain its stance of responding promptly to changes in the market situation.”
Policymakers said the central bank “would adopt the most effective method for money-market operations that conformed to changes in financial markets.” After an emergency meeting on 1 December, the central bank introduced a ¥10 trillion fixed-rate lending facility that was designed to arrest the yen’s advances and counter deflation. The central bank also characterized the most recent bout of deflation as “mild.” The Nikkei 225 stock index lost 0.86% to close at ¥10,546.44. U.S. dollar offers are cited around the ¥94.75 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥132.75 level and was supported around the ¥131.80 level.
The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥148.95 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥89.35 level.
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