The Japanese yen continues to gain momentum pushing down the US dollar to trade at 107.81 after breaching the 110.00 level just a short while ago. Just
Exports have turned out to be weaker than many BOJ officials had expected for cyclical and structure reasons: Global growth has been slower than forecast and they underestimated the impact of manufacturers moving their production overseas to compete in global markets amid the falling working population in Japan. At the September meeting, the BOJ left its quantitative easing programme unchanged despite some weakness in household spending.
At a subsequent meeting this week the BOJ kept policy unchanged and lowered its assessment of industrial production. Christine Lagarde, the head of the International Monetary Fund, has warned that the eurozone is displaying the symptoms of Japan’s longstanding economic problems and needs fresh moves to avert the threat of recession.
Speculation is growing that the ECB will adopt quantitative easing – the money-creation programme used by the US Federal Reserve, the Bank of England and the Bank of Japan – over the next few months. The euro recovered on Friday morning to trade at 1.2696 after breaking the 1.27 level on Thursday as the US dollar gave up some of its strength. The US dollar fell to 85.63 after hopes of an early interest rate increase were pushed farther out. The FOMC minutes released on Wednesday seemed to think that the committee would put off interest increases until later in 2015.