USD/JPY consolidation above 100.00 continues - MUFG

Derek Halpenny, European Head of GMR at MUFG, notes that the USD/JPY rate has continued to consolidate ahead of the key 100.00-level and of course the better dollar sentiment after the payrolls report will help sustain that this week.

Key Quotes

“The only development in Japan today on the markets side was the release of the “Summary of Opinions” from the July policy meeting when further easing measures were taken by the BoJ. Many of the comments focused on opinion in regard to communication with the markets, with one concerned the ETF buying might signal to the markets that the BoJ was running out of options. In addition there were calls for improving the explanation to the markets over the easing stance already in place.

Today also saw the release of the current account data for June, which revealed an increase in the surplus on a seasonally adjusted basis – on that measure, Japan’s surplus has been over the JPY 1.5trn mark in four of the six months so far this year. The 6-month surplus totalled JPY 9662bn, up from JPY 7543bn, a 28% increase. The likelihood of BoJ easing passing through to a weaker yen is much more difficult to accomplish when the current account surplus is expanding as rapidly as it is at present.”