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20 Apr 2015
Yen supported by more risk averse trading conditions – BTMU
FXStreet (Barcelona) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, notes that the Japanese Yen has gained support from increasing risk averse trading conditions resulting due to sudden easing in China and building concerns over Greece.
Key Quotes
“Investors are more risk averse following the disappointing start to the year for global growth. The Chinese authorities have responded to the ongoing slowdown in economic growth by easing monetary policy further over the weekend. The PBoC lowered the reserve requirement ratio by 1.00 percentage point which is effective from today.”
“More risk averse trading conditions in the near-term are also being driven by heightened investor concerns that Greek could default on its debts. In the government debt markets some tentative signs of contagion have emerged which may be adding to investor’ concerns. The 10-year yields spread been Italian and German government bonds has widened by around 25 basis points over the past week reversing all of the narrowing from earlier this year.”
“At last week’s IMF/World Bank spring meetings IMF Chief Lagarde reportedly told Greek finance minister Varoufakis that he needed to accelerate reforms. In an interview with the FT IMF Chief Lagarde stated that technical negotiations were “gradually picking up” and that “we really hope that is going to continue to fruition so that we can move on”.”
“The European Commissioner for economic and financial affairs Pierre Moscovici has set a mid-May meeting of euro-zone finance ministers as the decisive moment for Greece to agree a new set of economic reforms or face possible default.”
“ECB President Draghi made some interesting comments over the weekend as well stating that the euro area was better equipped than it had been in the past to deal with a new Greek crisis but warned of “unchartered waters” if the situation were to “deteriorate badly”.”
“We continue to believe that downside risks for the euro in the near-term would increase if developments in Greece deteriorated further in the coming weeks and month.”
Key Quotes
“Investors are more risk averse following the disappointing start to the year for global growth. The Chinese authorities have responded to the ongoing slowdown in economic growth by easing monetary policy further over the weekend. The PBoC lowered the reserve requirement ratio by 1.00 percentage point which is effective from today.”
“More risk averse trading conditions in the near-term are also being driven by heightened investor concerns that Greek could default on its debts. In the government debt markets some tentative signs of contagion have emerged which may be adding to investor’ concerns. The 10-year yields spread been Italian and German government bonds has widened by around 25 basis points over the past week reversing all of the narrowing from earlier this year.”
“At last week’s IMF/World Bank spring meetings IMF Chief Lagarde reportedly told Greek finance minister Varoufakis that he needed to accelerate reforms. In an interview with the FT IMF Chief Lagarde stated that technical negotiations were “gradually picking up” and that “we really hope that is going to continue to fruition so that we can move on”.”
“The European Commissioner for economic and financial affairs Pierre Moscovici has set a mid-May meeting of euro-zone finance ministers as the decisive moment for Greece to agree a new set of economic reforms or face possible default.”
“ECB President Draghi made some interesting comments over the weekend as well stating that the euro area was better equipped than it had been in the past to deal with a new Greek crisis but warned of “unchartered waters” if the situation were to “deteriorate badly”.”
“We continue to believe that downside risks for the euro in the near-term would increase if developments in Greece deteriorated further in the coming weeks and month.”