Week in FX Asia – Yen Appreciates Further After FOMC Minutes Released

• First anniversary of BoJ new stimulus
• BoJ holds rates. No additional stimulus needed
• JPY Appreciates after no stimulus and US Fed expected to hold rates low for longer.

This week marked the first anniversary of the Bank of Japan announcing its new round of monetary easing. The first arrow of Abenomics was launched as Haruhiko Kuroda announced the central bank would double the monetary base in two years to achieve the 2 percent inflation target. The first arrow was deemed a success and it boosted the local stock market as well as depreciated the currency.

After the hike to the sales tax was put in effect in the beginning of April some market watchers were expecting the Bank of Japan (BoJ) to increase the size of the monetary stimulus to offset the potential slow down to inflation. Governor Kuroda did not increase the stimulus and issued a more hawkish statement than expected. The JPY rallied after this at the beginning of the week and got a further boost from the release of the FOMC minus from the Fed.

The minutes form the Fed meeting seem to imply that Janet Yellen did speak out of turn regarding the 2015 rate hike timeline as there is no indication of that in the minutes. The JPY started the week at 103.25 and is not close to appreciating below 101.

The BoJ Governor did mention that the monetary policy would be adjusted if the economy needed it. Not ruling out easing or tightening. A welcomed change was the live broadcast of the BoJ briefing. This had the unexpected factor of seeing Kuroda’s confidence which was interpreted as a hawkish tone.

• China Inflation Rises to 2.4 Percent
• India Central Bank Governor Says Economy Ready For Fed Rate Hike in 2015
• India’s Trade Deficit Widens in March
• Nikkei Drops to Post Fukushima Low
• Japan Approves Nuclear Power Plan
• Asian Stocks Dragged Down By US Tech Stocks
• Australian Employment Rises in March Beats Forecast
• China To Boost Hong Kong Stock Market Ties
• Australia Speaks Up For China After US Displeasure On Recent Yuan Weakness
• Japanese Machine Orders Shrink More Than Expected
• Asian Stocks, Metals Climb Higher On Market Optimism
• Chinese Bond Default Risk May Be Much Lower Than We Fear
• China Growth Could Come in Below Target in 2014
• Australia’s Oil And Gas Sector Failing To Launch
• Bank of Japan Holds Rates Dismisses Need for Additional Stimulus
• Japan and Australia Finalize Trade Deal
• Japan Returns to Surplus in Current Account
• Surprise Surprise. US Not Pleased With Recent Yuan Depreciation
• Japan’s Next Tax Hike To Be Closely Examined

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