The U.S. Dollar and common currency Euro remained close to recently struck highs versus the Japanese Yen during Monday’s Asian trading session, however continuing uncertainty about the U.S. Federal Reserve’s position on QE tapering will mean that the greenback’s gains are likely to be limited. Market players may be anxious to continue with risk-on trade but analysts believe that the USD/JPY pair isn’t likely to move higher at this point in time, but could be a possibility before the year’s end. According to J.P. Morgan analysts, recent data has shown that speculators are becoming more Yen negative, with short positioning now just slightly above a 7-year trough.
As reported at 11:35 a.m. (JST) in Tokyo, the USD/JPY pair traded at 100.25 Yen, a gain of 0.1% and close to 100.43 Yen, which was Friday’s 2-month peak. The EUR/JPY pair also edged higher to 135.21 Yen, just off the October 22nd high of 135.52 Yen. The U.S. Dollar Index, a gauge of the greenback’s strength against its peers, dipped from Friday’s peak to 80.820 .DXY.
Markets Focus on Bank of Japan
While market players recognize that the Fed’s position is still unclear and likely to hinge on the next set of labor data, the Bank of Japan’s stance has been perfectly transparent. The Japanese government, via the Bank of Japan, is engaging in aggressive monetary and fiscal policy manipulations in order to stimulate the lackluster Japanese economy, and this week’s policy meeting at the BOJ will likely result in no change to its existing ultra loose monetary policy.