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Yen Joins Aussie Resilience as Currencies Snub Policy Stimulus

Posted by Chris Advincula on Aug 3, 2016 6:33:42 AM

(Aug 3 Bloomberg) *Both currencies are stronger now than before easing expanded  *Fed refraining from rate increase has weighed on dollar

For policy makers from Tokyo to Syndey, expanding stimulus has proven to be no guarantee of a weaker exchange rate.

The yen and the aussie are both trading stronger than before the announcement of increased stimulus in Japan and Australia over the past few days. The two currencies lead gains among developed market peers since June, appreciating at least 2 percent against the dollar. Bank of Japan Governor Haruhiko Kuroda and Reserve Bank of Australia Governor Glenn Stevens have each indicated currency strength represents a headwind for their economies.

Their difficulties are partly explained by the Federal Reserve's decision to hold off from raising interest rates so far this year, because of lackluster U.S. growth amid flare ups in geopolitical tension -- including the U.K.'s decision to leave the European Union. That's weighed on the greenback, with futures signaling tighter U.S. monetary policy won't happen until mid-2017.

"The RBA delivered about what was expected, but the aussie got caught up in the U.S. dollar's fall," said Imre Speizer, a market strategist at Westpac Banking Corp. in Auckland. "Had the BOJ been bolder, the yen would have probably weakened."

Click on the link below to see the full story from Bloomberg: (by Kevin Buckland and Netty Idayu Ismail)

Yen Joins Aussie Resilience as Currencies Snub Policy Stimulus





Topics: Forex, Australian Dollar, Forex Trading, USD/JPY, Fundamentals, BOJ. Fed, RBA Monetary Policy


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