Yen's decline brings fall for Aussie
On Friday afternoon the currency was at $US104.15, down from $US104.41 on Thursday.
Commonwealth Bank currency strategist Peter Dragicevich said news of Japan's massive quantitative easing program had boosted the US dollar against all major currencies since Thursday afternoon. "That demand for the US dollar has weighed on all currencies against the US dollar," he said.
The Bank of Japan on Thursday announced plans to spend 7 trillion yen ($70 billion) a month on assets such as Japanese government bonds as it tries to stimulate growth after two decades of stagnation.
Mr Dragicevich said the Australian dollar had risen sharply against the yen, pushing past the 100 yen level for the first time since August 2008.
He said the US dollar had risen even more, pushing up its relative value against the Australian dollar.
The key driver for the Australian dollar would be the release of the closely watched monthly US employment figures for March, he said.
AMP Capital chief economist Shane Oliver said while the rise in the Australian dollar was a negative for inbound tourism from Japan, it was unlikely to have much impact on Australian manufacturers given the limited exports to Japan.
"Quite clearly Australian consumers could be big winners with the 20 per cent-plus gain in the Australian dollar [in] the last six months likely to lead to lower prices for Japanese imports of things like cars and electronic goods," he said.
Dr Oliver said the outlook for the Australian dollar remained "messy".
Mixed Australian economic data is a negative but quantitative easing in the US and Japan is a positive, for a likely range of US95¢ to US110¢.
Frequently Asked Questions about this Article…
According to the article, a sharp fall in the Japanese yen and news of big central bank stimulus pushed demand into the US dollar. Commonwealth Bank strategist Peter Dragicevich said the Bank of Japan's massive quantitative easing boosted the US dollar against major currencies, which weighed on the Australian dollar.
The article reports the Bank of Japan announced plans to buy about 7 trillion yen (roughly $70 billion) a month in assets such as Japanese government bonds. That easing helped weaken the yen, lifted the US dollar versus other currencies, and indirectly influenced the Australian dollar's movements.
Commonwealth Bank's Peter Dragicevich noted the Australian dollar rose sharply against the yen and pushed past the 100-yen level for the first time since August 2008, reflecting the yen's sharp decline after the BOJ announcement.
The article highlights that the closely watched monthly US employment figures for March are a key driver to watch, because stronger or weaker US jobs data can move the US dollar and therefore affect the Australian dollar's value.
AMP Capital chief economist Shane Oliver said a stronger Australian dollar is likely to be negative for inbound tourism from Japan, but he believes it is unlikely to have much impact on Australian manufacturers because exports to Japan are limited.
Yes — the article quotes Shane Oliver saying Australian consumers could be big winners. The more than 20% gain in the Australian dollar over the last six months is likely to lead to lower prices for Japanese imports such as cars and electronic goods.
Dr Shane Oliver described the outlook as 'messy.' The article says mixed Australian economic data is a negative, while quantitative easing in the US and Japan is a positive, leading analysts to expect a likely trading range of about US95¢ to US110¢ for the Australian dollar.
While the article doesn't give investment advice, it suggests everyday investors keep an eye on major drivers cited by analysts: central bank actions like the BOJ's quantitative easing, US monetary conditions, and key economic releases such as the monthly US employment figures — all of which can move the Australian dollar.
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