Forex trading: PM Shinzo Abe nominated Asian Development Bank President Haruhiko Kuroda to run the Bank of Japan.
The yen was down for a third straight day in foreign exchange trading after Prime Minister Shinzo Abe nominated Asian Development Bank President Haruhiko Kuroda to become the governor of the Bank of Japan.
JPY fell 0.2% to 92.38 per dollar in early morning London trading, extending this month’s decline to 0.7%.
“Kuroda will push for that easing to support growth,” Janu Chan, an economist at St George Bank in Sydney told Bloomber.
“That’s what’s behind the yen weakness of recent months. All those expectations are embedded in the yen now.”
Earlier this month Kuroda said he supports additional stimulus in 2013 and that the central bank has “really substantial room for monetary easing”.
Should we be optimistic about the appointment?
Shane Oliver, head of investment strategy at AMP Capital, certainly believes it is good news.
“Japan is the world’s third largest economy and suddenly it’s taking steps to end the malaise it’s been in for the last 20 years – that has got to be good for the global economy.”
IW has a different take, however: “How, precisely, will it be good for the global economy? Japan’s malaise is too deep to cure – its ageing population & xenophobic attitude to immigration will see to that.”
Meanwhile, the euro is falling following the release of German unemployment data.
“EUR/JPY is diving and has already erased its daily gains by falling from 120.40/50, below its opening price of 120.14, and already below the 120.00 mark,” reported FX Street.
Wednesday had seen the currency hold up well after an auction of 10-yr Italian debt
that saw yield gap up to just below 5%.
IW says: “Likewise in Spain, Greece, Portugal, yields are again rising as confidence reduces. The next phase of euro weakness is just around the corner.”