Forex: Monday's review
The yen weakened for a second day as Japan made progress in cooling nuclear reactors at a crippled plant, increasing appetite for higher-yielding assets.The yen
extended losses after sliding the most against the dollar in six months on March 18, when the Group of Seven nations intervened to bring the currency down from a postwar high. The yen
surged to a post-World War II high of 76.25 versus the dollar on March 17 after a 9.0-magnitude earthquake and tsunami struck Japan on March 11, damaging cooling systems at a nuclear-power plant north of Tokyo. The currency’s gain came amid speculation investors were repatriating assets to fund an estimated 10 trillion yen ($123.6 billion) for reconstruction.
Japan’s Prime Minister Naoto Kan said today he sees “light at the end of the tunnel” for Japan’s crisis and that progress is being made in restoring power to reactors at the Fukushima Dai-Ichi nuclear plant.
The G-7, which comprises the U.S., Japan, Germany, the U.K., France, Canada and Italy, sold yen on March 18 after finance ministers spoke on a conference call, according to Japan’s Vice Finance Minister Fumihiko Igarashi. The G-7 statement promised to “provide any cooperation” with Japan.
Euro-area finance ministers plan to meet in Brussels to further develop a package of measures on the region’s debt crisis and economic governance. European Union leaders will hold a summit March 24-25 to discuss the measures.The Australian and New Zealand dollars
climbed for a second day as higher oil prices increased demand for currencies linked to commodities. Crude oil futures rose as much as 2.3% in New York.
EUR/USD: on results of yesterday's session the pair become stronger above a mark $1.4200.
GBP/USD: on results of yesterday's session the pair become stronger above a mark $1.6300.
USD/JPY: the pair bargained within the limits of Y80.80-Y81.30.
UK Inflation data is also out at 0930GMT. The Bank of England, in its February Inflation Report, forecast Q1 CPI would average 4.08%. If CPI does rise to 4.2% in Feb, as analysts expect (0.6% m/m), it is going to have to drop to 4.1% in March to get back in line with the BOE's forecast.
UK data continues at 1100GMT with the CBI Industrial Trends Survey. Manufacturing has been a bright spot in the UK's economic recovery.