As expected, the forex markets were fairly uneventful over the Christmas break, with one exception.
The yen tanked against all major currencies, spurred on by the Bank of Japan’s surprising announcement before the break to widen the allowance band around its yield target on 10-year bonds.
Governor Haruhiko Kuroda insisted that it was "absolutely not a first step" towards an exit from ultra-loose monetary policy, but a move to "continue the implementation of a sustainable monetary easing.”
Still, uncertainty swept through the markets, with the euro and greenback gaining close to 2% across the past seven days, and the pound losing 1.3%.
Yesterday’s Japanese retail sales data certainly didn’t help the yen’s cause - year-on-year growth of 2.6% fell far below the 3.7% forecast.
To the main pairs, GBP/USD is changing hands at 1.207, exactly where it closed this time last week.
Cable trades sideways in the Christmas period – Source: capital.com
EUR/USD is showing a bit more activity, having gained 0.3% to 1.064 in the past seven days.
EUR/GBP took an interesting turn by gaining nearly 0.5% to close at 88.43p, although the pair’s fortunes took a downturn in this morning’s Asia window and it is currently changing hands at 88.14p.