Could the Yen start to strengthen again ?

This morning I watched the yen climbing against all major currency in reaction to the Japan’s Economy Minister Akira Amari said a even weaker yen would harm the economy and the people.

I believe the strengthening of the Yen was based on this but also on reaction of North Korea missile launch . The Nikkei continued its advances just showing that they didn’t take notice of the Yen strengthening .

The morning saw the Yen strengthening as much as 1.1%, then calming down ti 0.4% pat 102.86 per $ .Considering the Yen touched 103.31 on Friday , was I surprised ? No as this was simple profit taking .

With the USA economy strengthening and know the Federal Reserve talking about the reduction of quantitative easing , things are looking positive as the dollar the advantage from the perspective of fundamentals . Fed Chairman Ben S. Bernanke is scheduled to speak to the Joint Economic Committee of Congress on May 22. Minutes of the Fed’s last policy meeting will be released the same day.

This could be the end of the $85billion a month stimulus .But considering that Japan just started its stimulus this could have a positive effect on Yen ( if you of the opinion a weaker yen is positive ) as then the Yen will becoming the carry trade again . Looking at this 110/120 is very likely .

So No I cant see the yen strengthening I can actually see it weakening by another 10/20% .Abenomics has unleashed a wave of cheap money and I cant see them able to control this genie they released , but it is creating a positive buzz and that’s all it needed to do .

Tony Evans

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