Yen Tanks Against Dollar And Euro On Expectation Of BoJ Easing

The Japanese yen fell sharply against the dollar and euro on Wednesday as Japanese Prime Minister Shinzo Abe wanted the Bank of Japan to take sufficient monetary policy action to achieve a 2% inflation target.

Versus the Japanese yen, although the greenback extended weakness to a low at 86.83 in Australia, broad-based selling of the yen lifted the pair to 87.55 in Asian and then 87.74 in European morning before retreating to 87.40. However, renewed selling orders of yen versus other currencies pushed price to an intra-day high at 88.02 in the New York afternoon.

The USD/JPY was supported due partly to the comments from Prime Minister Abe who said he "want[s the] BoJ to take sufficient monetary policy steps to achieve 2% inflation; want[s] to use the Council on Economic and Fiscal Policy (CEFP) meeting to deepen cooperation with BoJ; will continue to consider how to build a framework to cooperate more with BoJ."

Although the single currency traded sideways in the Asian session and then rose briefly to 1.3096 in European morning, the price dropped in tandem with the cable in the European session and pierced through Tuesday's low at 1.3057 to 1.3037 in the New York morning. However, the euro recovered to 1.3080 in U.S. afternoon due partly to the news that Portugal Secretary of State said "reform of state is crucial to sustainability; state is not sustainable as it is currently."

The British pound edged lower from Asian high at 1.6068 to 1.6037 before rising in tandem with euro to 1.6075 in European morning. However, active cross selling of sterling versus euro sent the cable below last Friday's low at 1.6010 to a 1-month low at 1.5992 in the New York morning before staging a recovery to 1.6033 in the New York afternoon.

Data to be released on Thursday:
Japan leading indicators, France industrial production, manufacturing production, BOE rate decision, QE total, ECB rate decision, U.S. Jobless claims, Wholesale inventories, Canada New housing price, Building permits.