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Forex Flash: Yen strengthening has failed to dampen JGB selling – BTMU

FXstreet.com (Barcelona) - The yen has recovered some its recent losses against the US dollar overnight. Japanese Economy Minister Amari spoke overnight reiterating the G7 stance that it is “important that currencies are not volatile” which may have dampened speculative yen selling given that on a trade-weighted basis the pace of yen weakness since October has been equivalent to it losing around a third of its value if continued over a whole year.

However, he declined to comment specifically about the yen. The modest strengthening of the yen has failed to dampen further heavy selling pressure in the JGB market with the 10-year yield rising by close to another 10 basis points reaching its highest level at 0.87% since August 2012. According to the BTMU Research Team, “The unprecedented action from the BoJ has clearly destabilized the JGB market at least in the near-term with the 10-year yield rising sharply from an intra-day low of 0.33% over the past month.”

The Japanese government does not appear overly concerned by developments although Economy Minister Amari stated overnight that they would continue efforts to reduce volatility in the bond market by closely communicating.

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