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Forex - Yen weakens further in Asia, bank lending gains noted

CommoditiesOct 12, 2016 08:25PM ET
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© Reuters. Yen weakens further - The yen weakened further on Thursday in Asia with investors taking note of the Fed minutes overnight that appear to suggest a rate hike is highly possible before the end of the year and ahead of China trade figures.

USD/JPY changed hands at 104.44, up 0.22%, while AUD/USD traded at 0.7537, down 0.32%. GBP/USD traded at 1.2189, down 0.04%.

In Japan, bank lending lending for September rose 2.2%, more than the expected gain of 2.0% year-on-year.

Later in China, a trade balance surplus of $53.00 billion is expected for September data, with exports down 3.0% and imports up 1.0% year-on-year.

Earlier, MI inflation expectations rose to 3.7% from 3.3%. A rise in inflation expectations would comfort the RBA because of its impact on wage and price-setting behavior, though the price survey has shown volatility in recent months.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.01% to 98.00.

Overnight, the dollar continued to hover at seven-month highs against the other major currencies in quiet trade on Wednesday, as investors awaited the minutes of the Federal Reserve’s latest meeting amid mounting hopes for a 2016 U.S. rate hike. Market expectations for a rate hike in December stood at 69.5%, according to the Fed Rate Monitor Tool.

Support for a rate hike this year rose as three members of the Federal Open Market Committee meeting who dissented at the last meeting may soon have the needed support for such a move, the minutes of the latest meeting showed Wednesday, with members noting a reasonable case could be made on both sides of the argument -- to increase rates or to wait for additional evidence on progress towards goals.

"Several members judged that it would be appropriate to increase the target range for the federal funds rate relatively soon if economic developments unfolded about as the Committee expected," the minutes of the Sept. 20-21 meeting said.

The pound found support after British Prime Minister Theresa May was forced to give way to MPs over how much influence Parliament has over her Brexit plan.

The British Prime Minister was effectively pushed into allowing Tory MPs on Tuesday to vote for a Labour motion calling for greater scrutiny of her Brexit proposals.

The motion, which demands that MPs scrutinise May’s negotiating position before she starts withdrawal talks with other EU states, is not binding on the government but underlines the weakness of the Prime Minister’s position in Parliament.

The pound had been under broad selling pressure since last week amid growing concerns over a ‘hard Brexit’ for Britain.

Citing leaked government papers, the Times reported on Tuesday that the U.K. could lose up to £66 billion a year under a "hard Brexit".

Forex - Yen weakens further in Asia, bank lending gains noted

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