Yen Lower Friday, Crosses Higher After Aso G20 Statement

The yen weakened broadly on Friday after Japanese FM Aso, who is attending the G20 meeting, said that there were "objections" to Japan's policies. He noted that "Japan explained that its monetary policy is aimed at achieving price stability and economic recovery, and is therefore in line with the G20's February agreement." BoJ governor Kuroda, who's also attending the meeting, reiterated that the policies are not "intended to weaken the currency at all, and it is a domestic policy goal to achieve the 2 percent inflation target at the earliest possible time." IMF chief Lagarde said BoJ has "clearly innovated" recent policies. Outgoing BoC governor Carney said the BoJ's policies are consistent with the G20's goals.

The draft statement from the G20 reiterated the pledge to "move rapidly towards more market- determined exchange rate systems and exchange-rate flexibility" urging member nations to refrain from competitive devaluations. The draft noted that global outlook is "generally somewhat weaker and uneven" with "unbalanced" recoveries between advanced economies and emerging markets. It noted that "fiscal drag, policy uncertainty, impaired credit intermediation, private deleveraging, and an incomplete rebalancing of global demand continue to weigh on global growth prospects,"

Yen crosses are generally higher today, and have recovered most of the early dip losses this week. Nonetheless, the crosses still held below last week's highs. We'd continue to view this week's price actions as part of near term consolidations, and don't anticipate a break out yet. We expect more sideways consolidation, with possibly another dip next week before the uptrend resumes later in May.

On the down front, the leading indicator for China was flat in March. German PPI dropped -0.2% mom, rising 0.4% yoy in March. Canadian inflation data was the major focus in the U.S. session on Friday.