Forex - USD/JPY jumps following G20 meeting

Investing.com - The Japanese yen tumbled against the U.S. dollar during Monday’s Asian session after G20 leaders vowed not to punish Japan due its rapidly depreciating currency.

In Asian trading Monday, USD/JPY jumped 0.73% to 94.19. Earlier in the session, the pair traded as high as 94.22. The pair was likely to find support at 92.23, Friday’s low, and resistance at 94.41, Tuesday’s high.

During the two-day G20 meeting in Moscow, monetary policy officials avoided overt criticism of Japan due to the weaker yen, but the leaders did say that members would "refrain from competitive devaluation" and said that risks to the world economy had receded but growth remained too weak and unemployment too high.

While taking a strong stand against currency manipulation, G20 officials indicated they will allow the yen to continue sliding as long as Japanese officials and policymakers do not make public statements to push the currency lower.

That opens the door for Japan to continue stimulating its economy, the world’s third-largest, and perhaps engage in asset-buying sooner-than-expected. Earlier this year, the Bank of Japan said it would engage in open-ended asset-buying, but the central bank disappointed markets by delaying the start of that effort until 2014.

Regarding BoJ, Prime Minister Shinzo Abe is in the process of selecting a new governor to lead the central bank to replace Masaaki Shirakaw who steps down next month. Earlier today, at least one media outlet reported that Toshiro Muto is the leading candidate to be the next BoJ governor and that Abe could make an announcement to that effect as early as this week.

Muto, formerly a BoJ deputy governor from 2003 to 2008, is seen as keeping with Abe’s efforts to jolt the slumbering Japanese economy through monetary easing and higher inflation. Abe has pledged to appoint a new BoJ governor that is willing to take bold action and engage in unlimited easing.

Elsewhere, EUR/JPY advanced 0.38% to 125.43 while AUD/JPY gained 0.36% to 96.75.