US Dollar Notches Further 17-Month Low vs Japanese Yen

Monday, 11 April: Japanese shares fell overnight  as data released showed Japan’s core machinery orders fell 9.2% in February from January – a sign that business investment remains subdued. The Nikkei closed -0.4%, weighed down by a strengthening yen and uncertainty surrounding when, or if, the BoJ will intervene. The Japanese yen has gained more than 10% against the US $ year-to-date, as investors flock to the “safe-haven” currency. A rising yen tends to worry Japanese companies as it lowers exporters’ earnings. Whilst the Bank of Japan (BoJ) shocked markets in January by announcing negative interest rates to its asset-buying programme, the move has failed to boost stock prices or arrest the unwelcome rise in the yen. To ease any unrest, at a speech at an annual meeting of trust banks, the BoJ Governor Haruhiko Kuroda has today said that the central bank will continue to closely watch how unstable global markets affect the country’s economy and prices, with no hesitation to take further action if needed to achieve its inflation target. The yen is currently ¥107.9 against the dollar.

In the UK, more than 4,000 jobs have been saved as India’s Tata Steel has sold its Long Products Europe business, which includes its Scunthorpe plant to investment firm Greybull Capital. Greybull have said they would buy the division, arranging a £400m investment and financing package, as part of a deal that included agreement with suppliers and trade union on resetting the businesses’ cost base. However, the 4,000 workers will be asked to take a pay cut and have less generous pension agreements. The business will be rebranded as “British Steel” once the deal has been completed. A deal to secure a buyer for Tata’s other major plant in Wales has also began today and the news comes after Tata Steel announced they would be selling its loss-making British business, putting 15,000 jobs at risk across the country. It is one less thing for David Cameron to worry about as pressure had been mounting for the UK Government to find a buyer for Tata’s UK assets, allowing him to continue defending his family’s tax affairs.

UK markets began the day negatively before remaining relatively flat throughout trading, closing slightly up by +0.1%. The CAC in France and the DAX in Germany were slightly stronger, ending Monday trading +0.2% and +0.6% respectively. In the US the S&P 500 and the Dow Jones are trading higher by 0.2% at the time of writing.