(From Reuters)
The yen recovered from a walloping at the end of last week on Monday, with investors focusing on a meeting of the Bank of Japan that many expect to deliver further easing of monetary policy in a bid to halt the currency’s rise.
Bets on the yen to strengthen further reached a record high in the week to last Tuesday, while positioning on the dollar turned to betting on outright falls for the first time in a year. [IMM/FX]
That largely reflects market scepticism that the U.S. Federal Reserve, which also meets on Wednesday, will push on any time soon with rises in interest rates that the rest of the world economy still looks too shaky to deal with.
“Such has been the aggressive move by real money investors to sell the dollar since the start of this year, it just says there is no real faith in what the Fed are trying to do,” said Neil Mellor, a strategist with Bank of New York Mellon in London.
“It’s tempting to see this as a modest correction to the big move higher we saw last year. But if the dollar is going to rise again, they will have to rebuild belief on markets that they can deliver these higher rates without, say, a blowout in China.” Read more