The Yen depreciated against the majority of its Forex counterparts as the markets prepared for the publication of the Federal Reserve’s policy meeting minutes, which may provide clues on when the central bank could raise the interest rate.
Yen Sustains Decline
The Yen fell against the majority of its money market peers as investors braced for the Federal Reserve to issue the minutes from the last policy meeting. Most speculators believe that the mixed data announced in the recent weeks could prompt the monetary authorities to keep the key cash rate near zero for an extended time, perhaps long after ending the stimulus program. In the meantime, the Yen traded lower against the Euro as the Yen eased slightly following a drop in Asian equities. In Japan, policy makers are hoping that the weaker currency will contribute to the economy’s expansion and perhaps end the twenty years of stagnation. According to analysts, exports are still low and this was evidenced by reports which showed that the number of shipments abroad were at the same level as they were when Prime Minister Shinzo Abe took office.
New Zealand Dollar Rallies
The New Zealand Dollar reached the highest level in almost three years against the greenback as demand for the latter declined before the Federal Reserve released the policy meeting minutes. The Kiwi benefitted as traders remained cautious, and shrugged off lackluster domestic releases which indicated that credit card sales did not post as expected, and Chinese inflation dipped to 2.3 percent in the month of June, after coming in at 2.5 the previous month. Further news from China revealing that the consumer price index climbed by 2.3 percent in the initial half of 2014 did little to impact the Kiwi. Other announcements confirmed that China’s economy grew 7.4 percent annually in the first three months of the year, and experts anticipate that the economy will show stability for the second quarter, even though the country is still facing headwinds due to a sluggish real estate market.
Sterling Slips Against Greenback
The British Pound declined against its U.S. counterpart but continued to trade above the psychological $1.7000 level, as Forex investors waited for the Federal Reserve to reveal whether a hike in the key cash rate could happen any time soon. The Sterling depreciated on Tuesday when domestic news pointed to a slowdown in manufacturing activities, and industrial production signaled the possibility that the U.K.’s economy may not be as solid.