FXstreet.com (Barcelona) - Lee Hardman, FX analyst at the Bank
of Tokyo Mitsubishi UFJ notes that the Yen has strengthened further
overnight, extending its corrective rebound following comments
yesterday from the Japanese Economic Minister Amari, which has
prompted investors to reassess the scale of Yen weakness desired by
In a Nikkei article overnight LDP Secretary General Ishiba also
highlighted that a weaker yen may trouble some industries which has
helped reinforce the yen's recent upward momentum. He maintains
that the price action is more a reflection of crowded short yen
positioning which had made a yen correction higher after largely
interrupted heavy selling since July 2012 long overdue. He adds,
"It is also a reflection that yen over valuation is closer to being
almost fully unwound according to our long term models with further
downside potential likely to require a fresh catalyst."
The comments from Economy Minister Amari and Secretary General
Ishiba do not appear particularly important providing limited extra
info on the government's current yen weakening policy. There
appears to have been some degree of confusion over exactly what
Economy Minister Amari stated yesterday with Reuters reporting that
he stated that the "yen has corrected to a level in line with
fundamentals", whereas the more accurate translation according to
Hardman´s colleagues in Tokyo was reported on Bloomberg as the yen
is "currently" correcting to a level in line with fundamentals."
As Japanese authorities are still considering further monetary
easing to help weaken the Yen. Hardman finishes by writing, "As
evident by comments from BoJ board member Shirai overnight who
commented on the benefits and costs of lowering rates on banks'
excess reserves held at the BoJ. The release of the stronger than
expected machinery orders report for November overnight provided
some tentative signs that Japanese economy is beginning to improve
with core private machinery orders expanding for the second
consecutive month by 3.9%M/M."