Yen Weakens vs. USD as BOJ March 16-17 Meeting Minutes Say that Suda & Noda Opposed Increasing Credit Program

The minutes from the Bank of Japan’s March 16-17 meeting revealed that Policy Board member Miyako Suda said there was no concrete rationale for increasing the central bank’s credit program to ¥20 trillion ($214 billion). Suda was joined in her opposition to doubling the scheme by Tadao Noda, who said the move would only have a limited impact. However, the minutes also revealed that many Policy Board members thought more lending would bolster the domestic economy. Following the release, the yen weakened against the greenback. USD/JPY rose by 0.17 yen to reach 93.23, a level just 7 pips below the pair’s session high.

USD/JPY Weakens as Japanese Finance Minister Says Economy “Gradually” Improving, though Self-Sustained Recovery Doubtful

Speaking at a press conference in Tokyo, Japan Finance Minister Naoto Kan noted that the yen is depreciating significantly. His comments come after Japan’s currency on Thursday hit its lowest level versus the greenback in more than seven months. With regards to the Chinese yuan’s exchange rate, Kan said it isn’t desirable to pressure Beijing on making the currency more flexible. He also said that the Japanese economy is “gradually” improving, though there’s only a “weak” possibility at present of a self-sustained rebound for the island nation. Following the finance minister’s comments, the yen strengthened, with USD/JPY falling to 93.68, a new intraday low, before pulling up from the brink. Traders undoubtedly picked up on Kan’s positive, albeit guarded, comments on the Japanese recovery.

Yen Rallies vs. USD as Japanese Tankan Survey Reveals Broad-Based Improvement in Q1

The Japanese Tankan survey for the first quarter of this year improved from its previous levels, especially in the non-manufacturing sector. The large manufacturers index rose to a -14 level, as expected, from -24 in Q4 of 2009. Meanwhile, the large manufacturing outlook increased to -8 in Q1 from -18 previously in a move that was also in line with the consensus forecast. The non-manufacturing index rose to a -14 read, beating calls for an improvement to -18 from -22 in Q4. Similarly, the non-manufacturing outlook component rose to -10 in Q1, overarching calls for an increase to -15 from -19 previously. Following the upbeat data, the yen strengthened: USD/JPY sold off by over 0.2 yen to hit a new intraday low of 93.41.

AUD/USD Sells Off Following Downbeat Aussie Retail Sales & Building Approvals for Feb

Australian retail sales disappointed the consensus forecast in February. Sales fell by 1.4% on the month versus expectations for a 0.3% rise to bolster the revised 1.1% gain in January. Released simultaneously, Australian private sector credit for February was essentially in-line with economists’ forecasts. Credit rose 0.4% on the month, as expected, and mirroring its gain in January. In annualized terms, credit increased by 1.6% in February versus calls for a 1.5% rise and following the 1.3% gain the month before. Although lower-tier in nature, Aussie building approvals data compounded the disappointing retail sales figures: approvals slipped by 3.3% on the month in February in a move that underarched calls for a 2.1% gain to partially erase the revised 5.5% drop the month before. Following the downbeat retail sales and housing figures, the Australian dollar sold off by almost 0.6 U.S. cents to hit a new session low of $0.9146USD.

Negligible JPY Reaction to Downbeat BSI Survey of Japanese Manufacturers

Japan’s large manufacturers remained optimistic in Q1 though sentiment declined from the previous quarter, according to government data released on Thursday. The BSI survey of large manufacturers fell to a 4.3 level in the first three months of 2010 from 13.2 in the previous quarter. A reading above zero indicates that optimists outweigh pessimists. However, the all industry poll indicated increasing pessimism with the index falling to a -2.4 level from -1.9 in Q4 of 2009. Despite the downbeat data, the yen’s reaction was minimal – USD/JPY rose by only a handful of pips to 90.45.

No USD/JPY Reaction to Above-Consensus Rise in Japanese Tertiary Sector Index

Japan’s service sector continued to expand in January, according to the island nation’s tertiary industry index on Wednesday. The indicator rose by 2.9% on the month, surprising expectations for only a 1.3% gain to follow the index’s 0.9% fall in December. Despite the upbeat results, the release remains only a medium-tier data-point and so was essentially shrugged off by the yen. The extent of USD/JPY’s reaction was to slip by a handful of pips to 90.29 yen. In early Asia-Pacific trading on Wednesday, the pair has traded between a high of 90.45 and al low of 90.22. Short term resistance lies at 92.15 with support at 89.63 and 88.14.

AUD/USD Slips as RBA Minutes Reveal Rates to “Move Gradually” Towards Normal Levels

Released on Tuesday (Monday night EDT), the Reserve Bank of Australia’s minutes from their meeting of March 2 revealed that Board members considered it “appropriate for interest rates to move gradually towards normal levels, and that it was time to make take another step in that direction”. The minutes also said, "Some recent indicators suggested that growth might already have been running at or close to trend for a few months." The central bank also said that inflation is likely to fall to around 2.5% in the year ahead. The RBA also said that growth will be "around trend rates over the next couple of years" and global economic activity will “continue at a reasonable pace with significant regional differences". With traders no doubt focusing on the fact that rates will move “gradually”, AUD/USD weakened to $0.9125USD following the announcement.