Amid continued
rumours the BOJ may inject a hefty stimulus boost soon, the Japanese currency
dropped on Wednesday as investors sold it on the currency markets.
A prominent
academic close to the Bank of Japan chief fuelled the rumours and said the
stimulus could arrive as early as July.
Governor Kuroda himself said the bank would be swift to back up the negative
rates they introduced in January, which had no major effect on the yen or
financial reports, by taking further easing measures in an economy which “still
has large downward risks.”
Last month the BOJ also threatened to
inject stimulus but held off on the move resulting in a greenback rise of half
a percent to 108.98 yen translating to an impressive recovery from its year and
a half low of 105.59 yen at the start of May.
After several threats of government
intervention to halt the trend by Finance Minister Aso, traders have responded
by taking their positive bets off the yen.
Many financial specialists think Japan will
be unlikely to take action until it hosts a G-7 summit at the end of May,
regardless of the meteoric rise of their currency by more than 11 percent
already this year.
Anthony Russell, Senior Vice President at MonexBMO Securities said “Tokyo is wary to intervene right now; it’s just testing
the waters and waiting for some reaction from home and abroad. The government
is still in a bit of a spot with the yen/greenback being stuck around a nervy
range of about 104 to 109.”
Meanwhile, in Europe, all eyes will be on
the Bank of England as it announces the results of its policy meeting on what
has been dubbed “super Thursday”. Investors will be holding their breath for
the quarterly inflation data when Governor Mark Carney holds a press meeting.
It’s expected the report will be fairly soft considering the Brexit debate is
still in the balance.
Latest polls indicate the vote on British
membership in the E.U. could still go either way and the pound is currently
looking defensive, down 0.3 percent at $1.4434 GBP not far from a fortnightly low.
The Norwegian economy has seemingly evened
off as the nation’s currency gained a tiny amount after the central Bank rate
decision this morning. It’s predicted by those in the know they will keep rates
unchanged.
There is a 50% chance the Norges will bring
on more rate cuts, which would see a drop for the crown.
