USDJPY Advances Near 4-Year Peaks, Risk-on Amid Surprisingly Lower CN CPI - 9.4.2013
The Yen remained under selling pressure losing further against the greenback with USDJPY advancing to almost 4-year high around upside hurdle at 99.60. The currency pair, after the decision of BOJ to double the monetary base and holdings of JGBs and other assets as well as include all maturities, surged from 92.70 to 99.60 in other words jumped more than 7% in less than a week.
Bold monetary measures reduced long term Japanese bond yields and sent traders elsewhere for higher yields, 10Y bond yields for other economies in Europe and Australia have beeen seen falling as BOJ decision on Thursday was indirectly influencing them. The EURUSD remains above 1.30 while yesterday rose as high as 1.3066 amid stronger German industrial production, also due to falling 10Y bond yields, Spanish dropped since previous Thursday 20bp and the Italian 26bp. Nonetheless, latest CFTC report on April 2 indicates that net short position on Euro increased to $10.5 bln against the US dollar and was the greatest increase of net short positioning among six major counterparties.
At the same time the Chinese annual CPI was at 2.1% for March, lower than expectation at 2.5% and down from 3.2% in February. Slower inflation for China reduces concerns of overproduction and improves risk appetite. In addition risk sentiment was also underpinned by surprisingly better than expected earnings per share for Alcoa, $0.08 EPS was estimated but $0.11 EPS was reported immediately after the US equities Monday closing. The AUDUSD climbed earlier today to 1.0445 following Chinese inflation data, however investors' risk sentiment is capped by continuing tension between North and South Korea.