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Posted December 22nd, 2014 by Charles Purdy

The Japanese yen is the main focus for the week ahead

  • This week will be a quiet one for the Canadian dollar, with little in terms of data, although with Christmas approaching and liquidity in the market low we could still see some large fluctuations in the market. On Tuesday we will see the only major piece of data from Canada, with growth figures expected to show marginal growth of 0.1% down from last month at 0.4%.
  • The Bank of Japan maintained status quo 8-1, leaving the annual monetary increase target unchanged at 80 trillion yen. For this week, we will see a whole raft of data out late on Christmas Day including industrial production, retail sales, unemployment and construction spending coming data due. This has the potential to be an incredibly volatile time for the yen.

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Posted December 15th, 2014 by Charles Purdy

More of the same as Japan re-elects Abe

  • The yen had a strong finish to last week as it drove towards its largest advance against the dollar in over 16 months as global stocks fell and Japan prepared for national elections this weekend. The Japanese currency has gained 2.2% this week, the most since August 2013. However, in the grander scheme of things Prime Minister Shinzo Abe’s economic policy of monetary easing, fiscal spending and structural reform have seen the yen tumble 30% in the last two years.
  • The Norwegian krone finished what had been a disastrous week at more than 11-year lows against the US dollar. This came following the central bank’s decision to cut its deposit rate to 1.25% from 1.5%.

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Posted December 11th, 2014 by Charles Purdy

Norwegian krone crumbles as oil price falls

  • The Japanese yen had another good day on Wednesday as it is moving towards its largest three-day gain against the US dollar in over a year. The yen jumped over 1% taking its total advance over the last three days to 2.4%. This is the largest since 7th August 2013. It was not just the dollar that the Japanese currency was up against, as it jumped against the majority of its peers as a measure of global currency volatility remained at 15-month highs.
  • The Norwegian krone had a terrible day on Wednesday as it dropped to five-year lows against the euro. Investors are awaiting the central bank’s forecasts on the extent of the impact of falling oil prices on Western Europe’s biggest oil and gas exporter.

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Posted November 17th, 2014 by Charles Purdy

The Canadian dollar continues to gain as Japanese yen remains under pressure

Last week the Canadian dollar gained on the majority of other currencies, including reaching three month highs against sterling after falling below the 1.77 mark. Canadian manufacturing sales figures were better than expected, rising a further 2.1% in September following the good news of a back-to-back gain in the monthly jobs report. However, weak oil prices continue to be a hindrance for the Canadian dollar, given its position as a commodity-driven currency. This week, we expect eyes to be on the CPI data released on Friday – previously, this was 0.2%.

The Japanese Yen remains under pressure and still hovers around the sever year low mark, due to increased sales tax in Q3 of this year, causing the economy to contract a huge 7.1% in the second quarter. If growth continues to be weak this week, it would make Japan likely to call early elections in order to prevent a tax hike next year. The focus will remain in Japan this week after growth data released on Sunday came in a long way below expectations. Later on this week we will have the Monetary Policy Statement and Press Conference from the Bank of Japan.

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Posted November 14th, 2014 by Charles Purdy

Russian rouble and Japanese yen suffer heavy losses

This week has seen the Russian rouble dominate the rest of the markets, seeing significant results. This started Monday as the Russian Central bank abandoned its currency’s trading corridor, allowing it to freely float. However as crude oil continued its disastrous month yesterday, the rouble dropped a further 1.5% against the dollar, having already lost nearly 30% this year. Also working against the Russian currency was the fact the US and European Union weighed new sanctions against Russia, which have seen the rouble suffer the biggest losses of the 24 emerging markets.

The Canadian dollar saw some respite at the start of the week, reaching the highest level in a week against a soft US dollar in the wake of poor labour data. However, weaker oil prices at the back end halted the Canadian dollar progress, holding the currency near to its five year lows. Today will see Canadian manufacturing sales data released, which could provide some support at the end of a mixed week.

Finally, the Japanese yen continued its decline following reports of a possible snap election. With speculation over Prime Minister Shinzo Abe calling this to push through reforms, the yen fell to fresh seven year lows against the US dollar. Further speculation that their government could delay its planned sales tax increase weighed down on the yen, as it drove up Asian equities and reduced demand for the safe haven. The yen stabilised a little later in the week, but is potentially a short term result as economic reports could point to weak data.

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Posted November 13th, 2014 by Charles Purdy

Japanese yen enjoys a bounce

  • The Japanese Yen has begun to stabilise and fight back from six-year lows against sterling and seven-year lows against the US dollar. The currency has been in a constant spiral since the Bank of Japan unexpectedly decided to increase its monetary stimulus. This may only be short-term relief for the yen as reports from the Japanese economy could point to weak data, and the country may have to brace itself for another increase in sale tax next year.
  • Good news for the Canadian dollar was halted as it failed to rebound convincingly from its current five-year lows against the US dollar due to weak oil prices. The currency continues to suffer as the Canadian economy continues to fall behind the US dollar. The Canadian currency did strengthen against sterling, but this was due to poor UK data. The currency is likely to stay in the current range until the release of inflation figures next Friday.

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Posted November 12th, 2014 by Charles Purdy

Japan and Rouble both weakening

  • Tuesday saw the Japanese yen continue to fall against the US dollar as reports came out that Japan may call a snap election next month in an effort for Prime Minister Shinzo Abe to push through his reforms. The yen has settled near seven-year lows against the dollar recently, and today was no different as the dollar traded down almost a percent against the yen, at 115.75. Also impeding the yen was the speculation that Japan’s government may hold off on a planned sales tax increase which boosted risk appetite and fuelled strong gains in Asian equities, curbing safe-haven demand for the currency.
  • The Russian rouble reversed Monday’s gains against the euro and US dollar on Tuesday as it weakened 1.5% against the dollar. Monday’s rally came after the Bank of Russia announced it would allow the exchange rate to float freely.

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Posted November 3rd, 2014 by Charles Purdy

Japanese yen weakens as central bank eases monetary policy

The Japanese yen fell to its weakest level in almost seven years versus the US dollar following an unexpected move by the Bank of Japan to increase its monetary stimulus to combat lower than desired inflation.
Overnight we have seen Chinese PMI data fall unexpectedly to 50.8 from 51.1 causing commodity backed currencies to come under pressure.

The economic calendar is very busy for the rest of the week. The Reserve Bank of Australia meets this week but no policy change is anticipated and we will also have key labour data released from both New Zealand and Australia.

The Governor of the Bank of Canada will be speaking twice this week and we will also see a raft of data released including trade balance figures, labour data and PMI figures.

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Posted October 31st, 2014 by Charles Purdy

Canadian dollar and Japanese yen suffering

  • The Governor of the Bank of Canada, Stephen Poloz, stated on Thursday that the depreciation of the Canadian dollar is the ‘icing on the cake’ for struggling exports, and said monetary stimulus is needed in order to claw back the country’s economic health. Recent strength of the U.S dollar has seen its Canadian counterpart decline. The Bank of Canada estimates that the economy will depend more heavily on exports to spur on growth, taking over from indebted consumers. Looking at other factors that may hinder the Canadian recovery, the recent depreciation in value of crude oil could potentially slow output growth next year.
  • The Japanese yen also suffered at the hands of a strong US dollar on Thursday as upbeat growth data – along with the Federal Reserve’s decision on Wednesday to draw an end to quantitative easing – saw the greenback continue what has been a positive week.

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Posted October 21st, 2014 by Charles Purdy

Japanese yen suffers

  • The Japanese yen was trading worse than expected as investors begin to sell the safe-haven currency. There has been an increase in investors buying equity and therefore less people investing in the yen due to the cabinet resignations in the Japanese Government. The Prime Minister of Japan Shinzō Abe said that the economy is a ‘work in progress’ and that he knew that increasing sales tax in the second quarter of this year had pushed the economy back into recession.
  • It was a very quiet day for the Canadian dollar, which slightly weakened throughout the day against the pound, as it gears up for an important week. On Wednesday we will see both retail sales data out, and – more importantly – the monthly interest rate decision, which is expected to remain at 1%, although any change would create a big swing for the currency.

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