Commentary from the Bank of Tokyo-Mitsubishi UFJ manager of FX trading, Naohiro Nomoto
He argues that if US equities can follow up gains in the Nikkei earlier today, then USD/JPY could be spared from a further decline tomorrow.
He also adds that "stock markets are still vulnerable" and that if "US equities market closes lower, it would weigh on Japanese stocks when they open on Friday".
The Nikkei closed higher by 1.47% earlier today. But USD/JPY still responded with a move lower so far, and is trading near the lows now at 106.40. The strength in the yen today also owes quite a bit to Japan's finance minister Aso, who commented that current yen appreciation does not warrant intervention just yet.
But surely it will be a cause of concern for Japanese officials as further yen strength will hinder their goal in trying to achieve the 2% inflation target.
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