4 Dec 2014
JPY dominates focus in early November – BNZ
FXStreet (Barcelona) - The BNZ Team shares the JPY scenario in November, while noting that JPY dominated the focus in early November, after BoJ and GPIF policy shifts, leading Yen to depreciate by 5.6% against the USD over November.
Key Quotes
“November was off to a cracking start, after the Bank of Japan and the Government Pension Investment Fund double-teamed the market on the final day of October. The BoJ’s step-up in asset purchases and the GPIF’s re-allocation shift toward equities and foreign assets sparked big moves in financial markets.”
“Look no further than the JPY, which depreciated by 5.6% against the USD over November, on top of the 3.0% single-day decline on 31 October. This weakness in JPY led the USD higher against the major currencies, with the broad Bloomberg Dollar Spot Index gaining 2.2% for the month.”
“The JPY’s woes were compounded by growing (and ultimately correct) speculation that Japanese Prime Minister Abe would delay a scheduled increase in the national sales tax from 8% to 10%, due in October 2015. The initial increase from 5% to 8% in April 2014 hit the economy much harder than policy-makers had anticipated, underscored by a woeful Q3 GDP report.”
“Japan’s economy contracted by 0.4% q/q, taking it into technical recession (after Q2’s 1.8% fall). Investors fretted that the government was faltering in its commitment to shore up Japan’s fiscal books. At 240%, Japan’s public debt-to-GDP ratio is the highest in the developed world.”
Key Quotes
“November was off to a cracking start, after the Bank of Japan and the Government Pension Investment Fund double-teamed the market on the final day of October. The BoJ’s step-up in asset purchases and the GPIF’s re-allocation shift toward equities and foreign assets sparked big moves in financial markets.”
“Look no further than the JPY, which depreciated by 5.6% against the USD over November, on top of the 3.0% single-day decline on 31 October. This weakness in JPY led the USD higher against the major currencies, with the broad Bloomberg Dollar Spot Index gaining 2.2% for the month.”
“The JPY’s woes were compounded by growing (and ultimately correct) speculation that Japanese Prime Minister Abe would delay a scheduled increase in the national sales tax from 8% to 10%, due in October 2015. The initial increase from 5% to 8% in April 2014 hit the economy much harder than policy-makers had anticipated, underscored by a woeful Q3 GDP report.”
“Japan’s economy contracted by 0.4% q/q, taking it into technical recession (after Q2’s 1.8% fall). Investors fretted that the government was faltering in its commitment to shore up Japan’s fiscal books. At 240%, Japan’s public debt-to-GDP ratio is the highest in the developed world.”