This morning the dollar is expanding its decline from yesterday, when it reported another weak session. The reasons behind the greenback’s fast drop lay in the Japanese stock market‘s decline and the uncertainty surrounding the Fed’s stimulus programme.
The US economy has shown tentative improvement in recent months, but still lacks a strong upward trend, especially in the labour market, which will give the Fed a green light to justify the reduction of the asset-buying programme.
Meanwhile, for the period November-May, the yen was the worst currency performer, while Japanese stocks have enjoyed a strong rise due to the easing measures adopted by the country’s government. However, the correlation turned around late last month and the yen entered into a recovering phase, which has already managed to correct more than 8% of earlier losses against the dollar. The yen, though, is still far from its trading levels before Shinzo Abe’s government and the BoJ intervened with their monetary policy aimed at reviving the country’s economic growth.
The USD/JPY was among the most volatile currency pairs during the session, dropping to an intraday low of 95.12 before continuing its dive overnight and trading as low as 94.10 at the time of writing.
The British pound received a strong boost by predominantly upbeat UK economic data, especially the report on the Claimant Count Change, which showed a better-than-expected improvement in the number on unemployed people in Britain. The sterling rose further overnight and at the time of writing was trading at 1.5663.
Looking further in the day, more volatility is expected from the US session as the country’s Retails Sales for May are due to be released. The BoJ monetary policy meeting minutes are also set for publishing, closing today’s economic calendar.
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