The Japanese yen begins this week on a general back foot while the dollar remains stable against its counterpart currencies. We look forward to a week full of policy decisions focusing on inflation. Prominent among them are the release of the U.S. consumer price data and the meeting of the European Central Bank.
Early on Monday morning, the dollar rose by 2.95% against the yen to reach 139.99, a one-month high. This is also close to its highest price level in May, at 131.34. Later on, the dollar pulled back to 139.7 yen.
The Japanese yen also resumed its dip against the euro. The euro also attained 140.38 yen early on Monday morning to extend its 7-year high, which it reached last week.
Several Factors Contributes to the Yen Slump
According to Barclays analysts, the continued slump of the yen is attributed to several factors. The factors include an increase in overseas yields, the strengthening of the dollar, and an increase in oil cost, all bringing about a shift of balance in Japan’s trade.
The measure of the dollar against the six other major currencies – the dollar index – halts and 14-days downward run and rose by 0.47% to reach 102.06. This was triggered by the excellent job and manufacturing reports.
Of utmost importance to many traders is the scheduled meeting by the European Central Bank on Thursday. This meeting will set the pace for an increase in interest rates late in their meeting next month.
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