JPY extends its downside - BTMU

By FXstreet.com | July 14, 2014 AAA

FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ, underlines the current selling interest around the JPY.

Key Quotes

"The yen has weakened modestly in the Asian trading session partially reversing safe haven driven gains from last week. The yen has been mainly driven by external events so far this year."

"The sharper than expected economic slowdown in the US has weighed down on USD/JPY. The US economy is now expected to expand by around 1.5% in 2014 compared to investor expectations at the start of the year of around 3.0%."

"Some investors have also been downgrading their estimates for the long-run potential growth rate of the US economy given weak productivity growth in recent years. Output per hour of all persons in the US business sector contracted sharply by a seasonally adjusted annualized rate of 3.5% in Q1 which was the largest quarterly contraction since Q4 1990."

"The average quarterly growth rate in recent years has slowed to around 1.0% from around 3.5% recorded between 1999 and 2004. As a result long-term real yields in the US have fallen back modestly so far this year undermining the US dollar. The US 5-year and 10-year TIPS yields have declined by 9 basis point to -0.44%, and 54 basis points to 0.23% respectively since the end of last year."

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