USD/JPY Pushes Above 110 as Yen Falls to Six Year Low Versus Greenback
October 1st, 2014 Guest post by Jay Hawk at Orbex.
The Japanese yen has fallen to a six-year low versus the strong Greenback this morning, as USD/JPY rallied past the psychological 110 level to hit a high point of 110.08 in active trading. This is the highest the exchange rate has traded since August of 2008 when it reached a peak of 110.39 before reversing lower.
Increased expectations of a widening interest rate gap between Japan and the United States continue to put pressure on the Yen. The Federal Reserve Bank is expected to start raising its benchmark interest rates in June of next year as the U.S. economy is showing gradual signs of recovery. In contrast, the Bank of Japan may be looking to add further monetary stimulus to its flagging economy.
Furthermore, the influential Tankan report came out earlier today showing mixed results for this key leading indicator of Japan’s economic health. The report showed a better than expected result of 13 for the Manufacturing Index but a worse than expected result of 13 for the Non-Manufacturing Index. Overall, the outcome was slightly worse than anticipated by the market’s consensus forecast, which probably contributed to the yen’s recent weakness.