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17 Apr 2013
Forex Flash: Yen sharply weaker as investor Gold concerns ease - BTMU
FXstreet.com (Barcelona) - Derek Halpenny, European Head of Global Markets Research at the Bank of Tokyo Mitsubishi UFJ notes that the yen is sharply weaker today and the Topix Index has retraced yesterday’s decline as investors’ concerns over the sudden sharp drop in gold ease.
He notes that the price of gold has stabilised at much lower levels but the recovery in equity markets is an indication that the drop in gold was not a broad signal of a more pronounced period of risk aversion. He views the gold price action as potentially indicative of the changing financial market dynamics and would concur that it doesn’t signal a severe period of risk aversion. Halpenny adds that Central bank monetary policy stances are simply too accommodative for that to be the case. The fallout from the BOJ action continues and the price action in the JGB market suggests continued nervousness with yields at the long end higher again today. Certainly, he feels that there remains no evidence of any shift in investor behaviour in regard to capital being shifted abroad. He writes, “The most recent weekly flow data revealed net selling of foreign bonds by Japanese investors following on from the repatriation that took place throughout the first quarter of the year. Anecdotal evidence in regard to Life Insurance companies’ investment plans for the fiscal year ahead also indicates little shift in risk tolerance.” He continues to believe that any shift in behaviour will happen only gradually.
Elsewhere, he notes that under PBOC guidance, the USD/CNY continues to set record (post-reval) fresh lows. Deputy Head of the PBOC’s research bureau is cited in the China Daily as saying that the USD/CNY trading band will continue to be widened as part of ongoing currency reform.
He notes that the price of gold has stabilised at much lower levels but the recovery in equity markets is an indication that the drop in gold was not a broad signal of a more pronounced period of risk aversion. He views the gold price action as potentially indicative of the changing financial market dynamics and would concur that it doesn’t signal a severe period of risk aversion. Halpenny adds that Central bank monetary policy stances are simply too accommodative for that to be the case. The fallout from the BOJ action continues and the price action in the JGB market suggests continued nervousness with yields at the long end higher again today. Certainly, he feels that there remains no evidence of any shift in investor behaviour in regard to capital being shifted abroad. He writes, “The most recent weekly flow data revealed net selling of foreign bonds by Japanese investors following on from the repatriation that took place throughout the first quarter of the year. Anecdotal evidence in regard to Life Insurance companies’ investment plans for the fiscal year ahead also indicates little shift in risk tolerance.” He continues to believe that any shift in behaviour will happen only gradually.
Elsewhere, he notes that under PBOC guidance, the USD/CNY continues to set record (post-reval) fresh lows. Deputy Head of the PBOC’s research bureau is cited in the China Daily as saying that the USD/CNY trading band will continue to be widened as part of ongoing currency reform.