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7 Jan 2014
USD/JPY regains bullish momentum
FXstreet.com (London) - USD/JPY continues to rally, undoing yesterday’s losses. The dollar was given a lift by a smaller-than-expected trade deficit in November on top of broad bullish dollar momentum and diverging monetary expectations for the pair. USD/JPY is currently trading at JPY104.60.
US trade deficit lowest in three-and-a-half years
The US trade deficit closed more than expected in November, dropping 12.9 percent to USD34.25bn - the lowest level since October 2009. The October figure was also downward revised by USD1.3bn to stand at USD39.3bn.
The figures released by the US commerce department showed that exports rose by 0.9 percent to a record USD194.9 billion, boosted by a 5.6 percent rise in petroleum exports. Imports fell by 1.4 percent to USD229.1 billion. The fall came from a decreased US demand for foreign oil offsetting record imports of imported autos. While the bulk of the decline in imports came from foreign oil, the deficit would have still narrowed without this factor.
Continuing Japanese expansion
The pair has rediscovered some of the momentum that drove it to three year highs of JPY105.4415 last week. Data released overnight by the Bank of Japan underlined that its aggressive monetary expansion remains in full swing. BoJ data showed a 46.6 percent expansion of the monetary base year-on-year in December, bringing the monetary base up to a record JPY193.5 trillion.
Momentum for USD/JPY has come from the diverging monetary policy expectations between the BoJ and the Fed. While the Japanese central bank is fighting to target 2 percent inflation, the Fed is pursuing a policy of relative tightening. Yesterday Janet Yellen was confirmed by the US Senate as the successor to Fed chairman Ben Bernanke, and it is expected that she will take up where he left off, with a steady unwinding of the current incarnation of quantitative easing.
USD/JPY regains bullish momentum
USD/JPY has gained 0.4 percent on the session open of JPY104.2345 to current price of JPY104.60 – down slightly from a session high of JPY104.7400.
US trade deficit lowest in three-and-a-half years
The US trade deficit closed more than expected in November, dropping 12.9 percent to USD34.25bn - the lowest level since October 2009. The October figure was also downward revised by USD1.3bn to stand at USD39.3bn.
The figures released by the US commerce department showed that exports rose by 0.9 percent to a record USD194.9 billion, boosted by a 5.6 percent rise in petroleum exports. Imports fell by 1.4 percent to USD229.1 billion. The fall came from a decreased US demand for foreign oil offsetting record imports of imported autos. While the bulk of the decline in imports came from foreign oil, the deficit would have still narrowed without this factor.
Continuing Japanese expansion
The pair has rediscovered some of the momentum that drove it to three year highs of JPY105.4415 last week. Data released overnight by the Bank of Japan underlined that its aggressive monetary expansion remains in full swing. BoJ data showed a 46.6 percent expansion of the monetary base year-on-year in December, bringing the monetary base up to a record JPY193.5 trillion.
Momentum for USD/JPY has come from the diverging monetary policy expectations between the BoJ and the Fed. While the Japanese central bank is fighting to target 2 percent inflation, the Fed is pursuing a policy of relative tightening. Yesterday Janet Yellen was confirmed by the US Senate as the successor to Fed chairman Ben Bernanke, and it is expected that she will take up where he left off, with a steady unwinding of the current incarnation of quantitative easing.
USD/JPY regains bullish momentum
USD/JPY has gained 0.4 percent on the session open of JPY104.2345 to current price of JPY104.60 – down slightly from a session high of JPY104.7400.