The yen fell during Monday’s subdued trading, with many markets remaining closed following the Easter Sunday holiday. Financial markets in Hong Kong, Australia and New Zealand were closed, while in Europe key markets such as Germany, France and the UK would also be shut; making for a quiet European session most probably.
Things should get more interesting once the United States reopens later in the day, with the release of personal income and spending as well as the Fed’s favorite inflation indicator; the Personal Consumption Expenditure price index. Core PCE deflator is expected to rise slightly to a 1.8% year-on-year increase during February, edging closer to the Fed’s 2% target.
On Friday, news that fourth quarter GDP in the United States was revised higher helped the dollar, as did speeches and statements by Fed officials the days before that indicated that the market was getting a little complacent with respect to the pace of Fed rate increases. There will be more highly anticipated US events during the week ahead, such as a speech by Fed Chair Janet Yellen on Tuesday and the March employment report and ISM manufacturing survey on Friday.
Dollar / yen was around 113.60, eyeing the 114 level, while euro / yen climbed to 126.75. It appeared that reduced demand for safe havens was hurting the yen, as stocks staged a powerful recovery during the past 6 weeks or so. Gold, another safe haven, was also under pressure as it fell to a 1-month low around 1208 dollars per ounce.
The pound was standing its ground after the previous week’s losses on ‘Brexit’ fears; around 1.4150 versus the dollar and with the euro dipping under 79 pence at 0.7890 pounds. In the absence of European news and data, the euro was little changed around 1.1160 US dollars.