"From our perspective, the trend for the Yen remains clear. Weak trade-related flows combined with increasing asset allocation by Japanese investors to foreign investments is a cocktail that is likely to push the yen gradually weaker."
- Nomura Bank
Japan's economy is on the mend. This fact can boost investors' appetite for the Yen; however, practically all experts are betting at a further decline of Japanese currency this year, taking into account April's tax hike, which can derail economic recovery. In a shorter term, it was a good strategy to buy the USD/JPY currency pair when it penetrated 103 level, and now, with the pair being at 104.3 it can be too late to benefit from the latest rally. However, investors, who consider the principally anticipated Yen's weakness, can open long positions. According to Nomura Bank, the pair will hit 105 in a one-month period, posting a gain of about 0.42%. Moreover, they believe there will be no additional action from the Bank of Japan as the process is in motion already and it just should not be disrupted.
Meanwhile, financial markets responded quickly to a bunch of fundamental data from Japan on Wednesday. The Bank of Japan said the M2 money supply advanced 4.2% annually in December, missing analysts' expectations for a 4.5% gain. The data pushed the USD/JPY up to 104.45. A couple of hours later the Japan Machine Tool Builders Association published its preliminary machine tools orders, saying they soared 28% in the year to December, accelerating from the prior 15.4% jump in November. This report is usually highly volatile, and therefore, the pair managed to fall only to 104.27.
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