FX Roundup: Dollar weakness continues as yen breaches JPY108 level again

At 1609 BST, the yen changed hands to a dollar at JPY107.92, with the US currency 0.14% lower. The greenback also fell versus the Swiss franc fetching CHF0.9521, down 0.16%. The euro headed higher versus the greenback by 0.30% changing hands at $1.1433, as did the pound fetching $1.4261, up 0.94%.

However, the euro slipped 0.61% against the pound to change hands at £0.8018 as traders await a meeting between US Federal Reserve Chair Janet Yellen and President Barack Obama at 2000 BST.

Kit Juckes, head of forex at Societe Generale, said: “The Bank of Japan's move to cut rates below zero at the end of January came as a surprise and at a time when there was nothing exceptional about JPY positioning, global markets were in turmoil, and the idea that negative rates would see Japanese investors rushing to buy foreign assets was odd.”

“The effect was an impression to markets of powerless policymakers – out of ammunition and possibly out of touch.”

Commodity linked currencies saw a good start to the weak as the dollar weakened. The greenback fell 0.69% against the Canadian dollar changing hands at CAD$1.2899. A plethora of other commodity currencies also rose, particularly in Latin America, with the dollar falling 0.78%, 0.20%, 1.08% and 1.71% against the Mexican, Chilean and Colombian pesos, and the Brazilian Real respectively.

Finally, the Australian dollar rose 0.71% against the greenback exchanging at US$0.7610, while the New Zealand dollar also rose 0.84% exchanging at US$0.6866.

Juckes added: “The (US) dollar isn't going to get a meaningful lift until those burgeoning Treasury shorts get some gratification. We, therefore, will stick to our core dollar-neutral FX trades - short NZD/CAD (oil); short GBP/NOK (not much on Brexit last week, as the focus shifted to tax, without getting any less infantile); and short EUR/RUB. I will have another go at shorting the yen in due course, but not yet.”