economics

Yen Falls as Kuroda Says Will Continue to Tweak Policy as Needed

  • Recent yen moves are in response to BOJ’s tone, ANZ says
  • Aussie gains on kiwi as Australia gets steel trade break

BOJ's Kuroda Says Firms Remain Cautious on Spending

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The yen fell for a second day against the dollar after Bank of Japan Governor Haruhiko Kuroda reiterated the central bank remains ready to adjust policy as needed following its intervention last week to cap rising yields.

Order books have extended yen short positioning beyond that shown in the latest CFTC data which saw leveraged accounts raising their net yen shorts by most since Jan. 24. Dealers are now nursing orders to exit those short positions if dollar-yen breaks below 113.50, according to Asia-based FX traders not authorized to speak to the media.

“The recent moves in the yen are largely a response to BOJ’s tone,” said Daniel Been, head of foreign-exchange research at Australia & New Zealand Banking Group Ltd. in Sydney. “Its resolve to maintain, and demonstrate its commitment to the yield curve control in the face of a number of other global central banks turning more neutral, once again highlighted the yen is completely beholden to the U.S. 10-year yield.”

  • USD/JPY rises 0.2% to 114.15 after being bought over Tokyo fix
    • CFTC data in week to July 4 showed leveraged accounts raised short yen positions by 13,046 contracts to 39,036
    • Traders note a lack of stop-entry buying on new highs in view of impending event risks including Fed’s Yellen’s testimony and U.S. CPI data this week
    • Japan core machinery orders fell 3.6% m/m in May vs est. +1.7% and -3.1% in the previous month, the most since August
  • Bloomberg dollar index little changed at 1,188.39
    • Reaction to the weekend G-20 summit was muted
    • U.S. 10-year yield also steady at 2.39% after climbing 2bps Friday as payrolls beat estimates
    • Brent crude up 0.8% to $47.09
  • NZD/USD falls 0.1% to 0.7273 on selling against Aussie dollar
  • AUD/NZD gains 0.2% to 1.0462
  • Australian steel and aluminum are set to be exempt from harsh U.S. import tariffs after lobbying from Malcolm Turnbull and Finance Minister Mathias Cormann: AFR
  • Hedge funds came piling back in to bets on the Aussie and the kiwi in the most recent CFTC data.
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