NEWS / Foreign Exchange

Japan March foreign reserves rise to record high

Good Friday

Japan March foreign reserves rise to record high

Japan's foreign reserves, the world's second largest, reached a record amount for the second straight month in March, as rising overseas yields boosted the interest rate income of bonds held in Tokyo's reserves, the Ministry of Finance said on Friday.

The reserves totaled USD 908.958 billion in March, up USD 3.91 billion from February, when they topped USD 900 billion for the first time. A rise in the euro, which boosted the dollar value of Japan's euro-denominated reserve holdings.

Strong job growth out of the US

The labour market data came out stronger than expected all around. This validates the FED??™s decision to hold onto their hawkish stance. In detail the number of jobs added to the US Economy in March was 180,000. This was way more than the expected 120,000. Combined with a revision of the February figure from 97,000 to 113,000 it led to a stronger dollar. EUR/USD fell to 133.70 after trading at 134.25 just before the numbers.

Although it seems that the market has been surprised by the news, nearly all of the leading indicators for payrolls pointed to stronger job growth. Furthermore the seasonal weather in March brought the return of construction sector jobs. Although the US dollar hit a 2 year low against the Euro yesterday, today's number could be enough to reverse the recent dollar bearish sentiment. As the Fed keeps interest rates intact at 5.25 %, carry trades should continue to be demand, with 120 in scope for USD/JPY.

Also unemployment came out better than expected at 4.4 % (consensus 4.6 %).

Easter Monday

Dollar stayed near 6-week high after U.S. Job data

The dollar held its broad gains on Monday, staying near a fresh six-week high against the yen hit after Friday's robust U.S. jobs report. The strong March jobs report eased concern about the weakening U.S. housing market and signs of softness in U.S. manufacturing, reinforcing the view that the Federal Reserve will not cut interest rates in the near term.

USD/JPY traded between 119.15 and 119.39

Very quiet FX-markets on Easter Monday

Major currencies traded in narrow ranges waiting for, among other, BoJ interest rate decision that was due later Tuesday.

EUR/USD traded between 133.60 and 133.88.

Far East Thursday:

BOJ kept policy unchanged, call rate at 0.50 %

The Bank of Japan left monetary policy unchanged at a board meeting on Tuesday, keeping the overnight call rate target at 0.50 % as widely expected by financial markets.

The decision by the nine-member board was unanimous.

The central bank will release its monthly economic report at 3 p.m. (0600 GMT) and Governor Toshihiko Fukui will hold a news conference from 3:30 p.m. (0630 GMT).

The BOJ raised its key policy rate to 0.50 from 0.25 % in February, judging that the economy would stay on track for steady growth with prices seen in an uptrend.