Forex Market Update: Yen Continues to Climb Against the Dollar


The currency market remained volatile in early trading on Wednesday following the Group of Seven (G7) statement. The Japanese yen edged higher against the dollar and was steady against the euro.

On Tuesday, currency market saw extreme volatility following confusion over the G7 statement. The G7’s statement, which was expected to calm the market, instead created more confusion. Initially, market participants interpreted the G7 statement as supportive of Bank of Japan’s (BOJ) ultra-loose monetary policy. However, a G7 official later clarified that the statement actually raised concerns over the recent excessive yen moves.

Shortly after the statement from the G7 official, the yen rallied against the dollar and the euro on Tuesday, and has extended its gains against the greenback in trading on Wednesday.

Speaking to Reuters, Peter Dixon, Global Financial Economist at Commerzbank, said that the world’s in turmoil with regard to currencies and it doesn’t really take a lot, in terms of a bad word here or there to spark volatility. Commenting on the yen’s recent weakness, Dixon said that everyone would love a weaker currency, but it is a zero sum game. He added that if you weaken the yen someone else has to suffer a stronger currency.

At last check on Wednesday, the dollar was down 0.15% to 93.33 yen. The euro, meanwhile, was flat at 125.80 yen. Both currencies had fallen sharply against the yen on Tuesday.

The euro steadied against the yen after data showed that industrial production in the euro zone rose 0.7% in December. The data further confirms that the euro zone economy is stabilizing.

In the U.S., traders will be eyeing the retail sales data for the month of January. The Commerce Department is expected to report an increase of 0.1% in retail sales for the month of January. The Commerce Department will also release a report on business inventories for the month of December.

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edliston
Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.

Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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