Japanese yen – Despite early morning weakness in Tokyo the yen has found its feet following a 7.1-magnitude earthquake that shook the nation. Investors clearly are having a hard time letting go of the unit as a safe haven when negative events hit the dealing screens. The dollar today buys ¥84.68 having earlier recorded a gain to ¥85.16.
Euro – There appears to be a growing chorus of negative voices in the aftermath of the ECB’s quarter-point increase in interest rates last week. At the weekend billionaire investor George Soros judged the move to be ill-timed in light of the Portuguese government’s request for financial aid. The debt-laden nature of peripheral countries is proving that the central bank’s one-size-fits-all approach to monetary policy is too tight around the fingers for those nations having to roll over maturing bonds in the European debt market. Yield-happy buyers drove the single currency up to within 12 basis points of $1.4500 to close last week, but on reflection investors are turning less enthusiastic given the health of the economy at Europe’s edge in light of a tighter monetary stance. The euro traded lower to stand at $1.4438 by lunchtime in London.
British pound – MPC member Andrew Sentance told Britain’s Sky News at the weekend that he continued to vote for an interest rate increase at the April policy meeting that would double the cost of borrowing. Mr. Sentance says that he wants to assure that the central bank doesn’t lose control of inflationary pressures, noting that public opinion had slowly shifted towards expecting a gradual increase in interest rates as prices gained upside momentum. On Tuesday the government will release consumer price data for March and is expected to report a 4.4% gain to match the February reading. The pound continues to trend lower to start the week although is off a session low at $1.6314.
Andrew Wilkinson is a Senior Market Analyst at Interactive Brokers LLC
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