Daily Forex News February 13th 2013

Daily Forex News February 13th 2013FCTOFX: Markets were clearly confused by the G7's messages regarding the Japanese Yen yesterday. The Yen initially dipped as the official statement released from G7 seemed to be general without targeting recent depreciation in the Japanese currency. However, some unnamed officials came out and "clarified" that the statements were indeed targeting the yen and these comments sent it higher. The statement pledged that G7 policies "will remain oriented towards meeting our respective domestic objectives using domestic instruments, and that we will not target exchange rates." An unnamed US official was quoted later in the day saying the statement was "misinterpreted" and has indeed "signaled concern about excess moves in the yen". The official warned that ":the G7 is concerned about unilateral guidance on the yen" and "Japan will be in the spotlight at the G20 in Moscow this weekend."

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Daily Forex News February 13th 2013Then it's reported that a Canadian official said that statement was aimed at calming recent rhetoric on yen and criticized that Japan has been too vocal on the need for a weaker currency. US Dollar Japanese Yen is back at around the 93 level after jumping to as high as 94.45 yesterday. Meanwhile, Euro Yen and Sterling Yen are stuck in recent range below 127.70 and 117.97 respectively. The meeting of G20 finance ministers in Moscow this Friday and Saturday will now be important in the near term trend for the Japanese Yen. It's expected that emerging market countries could be critical of Japan's recent rhetoric's and policies in the G20 meeting.


Daily Forex News February 13th 2013In Europe, the European Central Bank's President said that the talk and fear of a currency war "are way, way overdone" and warned that comments on the Euro's exchange rate will "increase the confusion around the exchange rate and frankly, we don't need that." He emphasized that comments from people whose mandate "is not immediately related to monetary policy" are "inappropriate or fruitless." And, these comments are "inappropriate" if they are meant to instruct the ECB. Draghi then noted that "both the nominal and real foreign exchange rates are about or at their long-term averages," and "what we want to assess now is whether the appreciation, if sustained, has the potential to change our risk assessment for price stability." Meanwhile, regarding the yet to be activated Outright Monetary Transactions, Draghi said "the ECB can only consider OMTs if there are major problems in the transmission of monetary policy and if there is strict and effective conditionality attached to an appropriate European Stability Mechanism program."


Daily Forex News February 13th 2013In the US, Philadelphia Fed Plosser commented on the Fed's pledge on keeping rates near zero until unemployment drops to 6% and as long as inflation doesn't threaten to rise above 2.5%. He said that while the Federal Open Market Committee gave such indication, it is "silent on how policy will actually be conducted". And he complained that "this vagueness runs counter to the theory that supports the use of this explicit form of forward guidance in the first place." And he'd "prefer that monetary policymakers be more transparent and adopt a systematic policy rule as a guide to policy." Richmond Fed Lacker said that "a sense of urgency is appropriate" in addressing weak economy. And, a "more measured response by the Fed in August 2007 could have resulted in significantly less instability in 2008."


Daily Forex News February 13th 2013On the data front, the Aussie was lifted mildly as Westpac consumer confidence rose 7.7% in February. From Japan, domestic CGPI dropped 0.2% year on year in January while the tertiary industry index rose 1.4% month on month in December. Swiss PPI and Eurozone industrial production will be the released in European session. But the main focus will be on the Bank of England quarterly inflation report. Markets are speculating that the Bank of England will revise down the growth forecast. Retail sales, business inventories and the import price index will be released from the US later today.


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Daily Forex News February 13th 2013

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Transcript of Daily Forex News February 13th 2013