TOKYO, July 23, 2018 /CNW/ - Nanto Sapporo Brokerage say the yen gained a two-week high against the euro on Monday after the Japanese central bank reported it was considering scaling back its huge monetary stimulus.
Comments by U.S. President Donald Trump on Friday regarding the weak dollar led to a further unwinding of short yen positions.
"Headlines regarding the central bank's plan to adjust its policy stimulus is causing the current big yen move but unless solid steps are in places, the yen's current strength may reduce" commented Miyazato Eiichi, Chief Financial Officer from Nanto Sapporo Brokerage.
With the scheduled monetary policy meeting towards the end of July looming, the Bank of Japan has begun an unusually active discussion, with changes to its interest-rate targets and stock-buying techniques a main focus.
The majority of the Bank of Japan's current policy, which was adopted in 2016 consists of negative short-term interest rates, buying stock through exchange traded funds (EFTs) and keeping the 10-year yield around zero percent.
Against the euro the yen rallied half a percent to 130.00, its highest since July. It saw a similar rise against sterling 145.85 and the dollar at 110.00.
With 60 thousand contracts in the latest weekly data, almost double the amount of short bets against the yen, some traders foresee more growth for the yen in the weeks ahead.
CNBC reported on Friday that President Trump was concerned that the Federal Reserve will increase interest rates a further two times this year. Also mentioning the Fed's current policies and strong dollar could also hurt the economy.
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