Yen Falls Against Most Majors

The Japanese yen fall against most major currencies on speculation that the bank of Japan will implement further monetary easing measures. Recently the yen has benefited from repatriation flows as Japanese corporations seek to repatriate funds before the end of the fiscal year. Most experts believe the BOJ leans towards monetary easing but disagreement among board members on how to justify such a move remains. A report that showed that Chinese exports gained the most in three years lifted investor risk appetite putting further pressure on the yen. Chinese sales gained 46% in February. Commodity linked currencies gained on the Chinese export data. Greg Anderson of Societe Generale SA stated, “There is a firm underpinning to the global economic recovery. The yen normally weakens when stocks go up and has been reluctant to do so the last few weeks. Now it’s playing catch-up.” The yen fell 1% against the euro to 123.60 and fell 0.7% vs. the US dollar to $1.3646.

Risk Sentiment to Improve say Experts

Better than expected data prompted carry trades where investors use currencies borrowed in nations with low rates to finance the purchase of higher yielding currencies such as the Australian dollar and Brazilian Real. The Chinese data helped the Aussie dollar since Australia is one of the chief suppliers of raw materials to China. Currency experts expect high yielding currencies to continue to perform well. Lee Hardman of Bank of Tokyo Mitsubishi UFJ Ltd stated, “Conditions will continue to improve on the risk-sentiment front, and the emerging-market currencies and commodity-linked currencies are likely to outperform over the coming weeks.”  The Aussie dollar gained 0.6% hitting a seven week high vs. the US dollar and traded at 0.9186,. Analysts at Commerzbank said, “They (Australian and New Zealand dollars) are benefiting from good Chinese data which suggest that the economy there is expanding strongly.” The Kiwi dollar rose to a five week high gaining 0.9% and traded at 0.7087.

Euro Trading Volatile

Euro trading was volatile with gains and losses throughout trading sessions. On Tuesday the euro took a hit after Fitch’s ratings agency said it has a negative outlook for Portugal’s debt rating. A highly successful Portuguese bond sale lifted euro sentiment slightly. The euro was lifted after Greek Prime Minister George Papandreou met with US President Obama and said that Obama expressed support for Greece’s austerity measures. Papandreou told reporters, “We’re not asking for a bailout, we’re not asking for financial help from anyone. What we are doing is first of all revamping our own economy. We are taking measures to put our economy on the right path.”