Monday, August 11, 2014

The Japanese yen

Capital markets continue to look for interest rate clues and the central bank in the pole position  the Bank of England (BoE)  could indicate a possible change to these seemingly uniform monetary policies. The pound is floundering just below 1.6800 level in quiet trade. Though there are no central bank rate announcements due, the market will get to hear from BoE Governor Mark Carney midweek. On Wednesday, the BoE will publish its forecasts for growth and inflation and investors will be focused on the timing for the U.K.’s first post-crisis rate hike. If the BoE happens to lower its expectation of slack in the U.K. economy it could be supportive of sterling.
The Japanese yen is listless on Monday, as the pair trades slightly above the 104 line in the European session. On the release front, Tertiary Industry Activity disappointed, coming in at -0.1% in July. Consumer Confidence showed little change, missing expectations. In the US, there are no economic releases to start off the week. The sole US event on Monday is a speech by Federal Reserve Governor Stanley Fischer, who will speak at a conference in Tokyo.
Japanese releases started off the week with disappointing numbers. Tertiary Industry Activity, an important manufacturing indicator, posted a decline of 0.1%, short of the estimate of a 0.2% gain. This weak reading was a sharp drop from the strong gain of 0.9% a month earlier. Elsewhere, Consumer Confidence came in at 41.5 points, short of the forecast of 42.3 points. The good news is that the indicator has moved upwards for three consecutive months. We’ll get a look at the BOJ minutes on Tuesday.