Forex Flash: The case for AXJ FX intervention weakened on three fronts - DBS Group

FXstreet.com (Barcelona) - DBS Group analysts note that the case for Asia ex Japan FX intervention has been weakened on three fronts.

Firstly, they note that China has consistently guided the Chinese yuan to new highs. Second,the US Treasury Currency Report issued before mid-April strongly encouraged China, Korea and Taiwan to respect market forces in determining exchange rates, with the Korean won and Taiwan dollar recovering since then. Thirdly, they sees that the prospect of runaway yen depreciation has diminished. They write, “The Nikkei 225 index is now less than a thousand points below the Dow Jones Industrial Index. When the yen depreciation started late last year,that gap was around 4000 points. Consensus now expects the inflation in Japan to hit 2% in 2014. This sends a strong signal that the Bank of Japan has done enough for now.”