THE TAKEAWAY: The yen sold as corporate bankruptcies declined > Traders previously bought the yen after EconMin Amari hinted aggressive easing may harm economy > GBP/JPY traded slightly higher
The Great British Pound appears to have found support against the Japanese Yen as corporate bankruptcies in Japan declined 13.8 percent in December. The GBP/JPY currency pair had moved strongly bearish two hours prior to the data release when Japanese Economy Minister Amari commented that an ‘excessively’ weakening yen could be harmful to the economy. Such comments fly contrary to recent rhetoric from central bank policy officials’ call for aggressive monetary policy in an attempt end deflation and weaken the yen.
Forex traders likely took the comment as a sign that the Bank of Japan may not pursue an overly aggressive policy stance thus leaving the heavily sold yen with plenty of room to strengthen.
GBP/JPY, 15 Minute Chart
GBP/JPY, Daily Chart