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JPY undermined by global monetary easing - BTMU

FXStreet (Barcelona) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, notes that the yen has weakened modestly in the Asian trading session alongside due to the improvement in global investor risk sentiment.

Key Quotes

“The yen has continued to weaken modestly in the Asian trading session alongside the ongoing improvement in global investor risk sentiment. Asian equity markets are higher overnight building on upward momentum from the US equity market which climbed to fresh record highs at the end of last week."

"Global investor risk sentiment is being boosted in the near-term by actual and building expectations of further monetary easing from the major central banks.”

“The PBoC unexpectedly announced on Friday that it will lower rates for the first time since July 2012. The one-year deposit rate has been lowered by 0.25 point to 2.75% and the one-year lending rate has been lowered by 0.40 point to 5.60%. It appears to mark a shift in policy away from more targeted easing which could prove more supportive for economic growth.”

“Leading indicators had been signalling a further loss of growth momentum heading into year-end while inflation measures remain subdued leaving scope for further easing to support growth if required.”

“Commodity-linked currencies such as the Australian dollar, Brazilian real, and Chilean peso all bounced higher following the PBoC’s announcement although it remains to be seen whether stimulus will have a material impact at supporting the economic growth outlook for China. “

“The measures will cut the cost of credit but not necessarily increase the amount of credit
available.”

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