GBP/JPY Exchange Rate Fluctuates within a Narrow Field, USD/JPY Exchange Rate Seesaws ahead of key Data
The Pound Sterling and the US Dollar have softened against the Japanese Yen on Wednesday despite the fact that the tensions between Russia and Ukraine have eased slightly.
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The US Dollar to Japanese Yen exchange rate is currently trending in the region of 104.9468.
Tuesday saw demand for the Pound diminish in spite of the fastest growing factory output in seven months.
The UK Construction PMI was forecast to drop from the previous figure of 62.4 to 61.5, but the actual data saw an increase to 64.0. Ordinarily the positive print would have seen increased demand for Sterling, but a YouGov report essentially snuffed out any hopes for a bullish run.
A YouGov poll to identify the percentage of voters who are pro or opposed to Scottish independence showed that the once significant gap in favour of unionists has narrowed somewhat. Having seen a 22% advantage less than a month ago, those in favour of maintaining the union has dropped to just 6%.
Libby Brooks, writing for The Guardian, said; ‘This is a huge boost for the morale of the yes campaign, particularly because YouGov has regularly reported lower levels of support for independence than other polling companies’.
Conversely the US Dollar strengthened against the majority of its peers after manufacturing data exceeded expectations.
The ISM Manufacturing Index was forecast to drop from the previous figure of 57.1 to 57.0, but the actual data showed an increase to 59.0.
The Japanese Yen struggled on Tuesday after speculation that the pension fund will increase its holdings of equities and cut its domestic bond assets.
The Pound Sterling to Japanese Yen exchange rate has hit a low today of 172.4400.
The US Dollar to Japanese Yen exchange rate has hit a low today of 104.8962.
Wednesday has seen a continuation of Sterling’s bearish behaviour as the threat of Scottish independence weighs heavily on the British currency.
Not even an extremely positive services score could bolster the Pound, which is surprising considering that the British economy is driven mostly by the services sector.
The Services PMI was expected to drop from the previous figure of 59.1 to 58.5, however the actual data showed an increase to 60.5.
The US Dollar has softened considerably in comparison to Tuesday. This is the result of a combination of poor data releases and trader anticipation of the Federal Reserve Beige Book Publication due later on Wednesday.
MBA Mortgage Applications fell to 0.2% having registered a score of 2.8% previously.
Factory Orders were also seen to have fallen below the forecast figure, but the actual data is still a big improvement on the previous score.
Earlier on Wednesday morning the situation between Russia and Ukraine had eased a little after the Ukrainian President Petro Poroshenko announced that he and the Russian President Vladimir Putin had arranged a ceasefire in Eastern Ukraine.
Although this was a slight exaggeration it has been widely accepted that there is increased likelihood of an end to the conflict in the near-future.
Given the easing geopolitical tension it would be safe to assume that the need for the safe-haven Yen would drop.
However, the Yen has strengthened against many of its closest peers as the result of a Japanese cabinet reshuffle. The Japanese Prime Minister Shinzo Abe has appointed a new minister for health; naming Yasuhisa Shiozaki, an outspoken supporter of changes to Japan’s public pensions.
‘Investors believe Shiozaki will spearhead reforms because he is a leading figure for GPIF changes and vocal about corporate governance,’ said Hiromichi Tamura, Japan chief strategist at Nomura Holdings Inc., the nation’s biggest brokerage.
‘This will cement the market view that GPIF will cut its local bond target to 40 percent and boost Japanese shares to 20 percent in its new portfolio’.
Forecast for the Pound Sterling and US Dollar to Japanese Yen Exchange Rates
In terms of British economic data the most significant will be the Bank of England interest rate decision.
Although it is generally accepted that the BoE will not change the current interest rate at 0.50%, it will be of interest to those invested in the Pound to see if there will be any more dissenters from BoE President Mark Carney’s monetary policy.
The US ISM Non-Manufacturing Composite holds the most weight in terms of wider market movement.
It is forecast to drop from the previous figure of 58.7 to 57. Those invested in the US Dollar will also wish to closely monitor the labour market data, especially as we approach ever closer to the Federal Reserve interest rate decision.
Thursday will be of high importance for the Japanese economy as the Bank of Japan will release their monetary policy statement.
There aren’t any expectations of a dramatic change although the recent cabinet-reshuffle may have an effect.
The Pound Sterling to Japanese Yen exchange rate has reached a high today of 173.3200.
The upcoming Bank of England interest rate decision has seen investors holding off on buying into Sterling. Despite the fact that it is incredibly unlikely that there will be any major changes in monetary policy, the data will be of huge weighting in terms of gauging economic standing, and effecting market movement.
In terms of US Data the ISM Non-Manufacturing Composite holds the most weighting and is expected to drop from 58.7 to 57.7.
The Bank of Japan Governor Kuroda gave a monetary policy statement on Thursday in which he outlined the need to raise sales tax in order to fix its finances. The outcome of this statement, in terms of wider market movement, is as yet unconfirmed as traders focus on the Bank of England and European Central Bank interest rate decisions.