The Japanese yen continued its gains against the US dollar, albeit incrementally, throughout the New York session as economic reports remained positive for the world's second largest economy. A focus in the overnight session, the industrial production survey reported higher productive activity in the month, rising 1.9 percent. The figure improved upon the 1.3 percent decline seen in May and trumped the 1.3 percent consensus figure. With speculation on the overall economic condition remaining somewhat 50-50, the report bodes well for the underlying currency as a testament of further expansion potential.
Additionally supportive were Yuan gains against the US dollar in the overnight. With the yen continuing its proxy status for the Chinese denomination, further speculation over the prospects of a near term revaluation effort are boosting a yen bias. Once again testing new lows below the 7.98 figure, the Yuan is rising in value as policy makers are making a concerted effort to preserve the value of the local currency by calling for a slow down in foreign investment. However, the belief stands that with rising amounts of foreign money attempting to enter the economy and contracts trading at new lows, policy makers will ultimately relent and move for flexibility through a wider trading band in the near future. Coupled with the recently acquired bearishness towards the US dollar, the yen may very well have some room left to rise.
Al Bawaba
