By TraderVox.com
Tradervox.com (Dublin) – The US dollar has shown some strength after weakening over the week. The currency increased to a nine-month high against the yen prior to a US report next week expected to show that the economy grew over the month of January. The depreciating Yen is as a result of the Bank of Japan’s effort to deflate the currency which had impacted negatively on export earnings. These efforts are working as the yen declined against 14 major currencies. Further, government data showed consumer prices declined which has also reduced speculation that the government will make another intervention.
The dollar has had a fairly good week as the Dollar Index is headed to its biggest weekly gain in two months. Morgan Stanley has also revised its forecast for the greenback upward. Yesterday the dollar increased fairly against the euro and this trend has continued today as reports from Germany showed that retail sales fell.
According to Adam Cole who is Head of Currency Strategy at RBC Capital Markets in London, the move in the USDJPY seems to be pushing the dollar higher even against other currencies as well as keeping the dollar well-bid across the board. He also added that the EURUSD move is a reflection of the general trend for the dollar.
The dollar gained 0.5 percent against the yen to settle at 81.53 yen. It had earlier climbed to its highest of 81.71 yen which is the highest since May 31. The JPY dropped against the euro by 0.1 percent to settle at 108.08 yen per euro. Dollar climbed by 0.5 percent against the dollar to settle at $1.3250.
The Dollar Index used by the Intercontinental Exchange Inc. to track the performance of the dollar against six other major currencies rose by 0.4 percent to give a total weekly gain of 0.9 percent. This is the largest weekly gain since January 6.
Japan consumer prices dropped for the fourth month running in January. The index declined by 0.1 percent according to the statistic bureau. The Bank of Japan set an inflation target of one percent and doubled its asset-purchase kitty. Investors are now looking for the next policy makers’ meeting in March 12-13. There are some economists who are forecasting another government easing efforts might be announced in the next meeting.
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