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EUR to JPY Exchange Rate Rallies on Pension Reform Speculation


The Japanese Yen softened against all 16 of its major peers on Tuesday amidst speculation that the Japanese Prime Minister Shinzo Abe is intending to appoint someone in charge of the reformation of the Government Pension Investment Fund.

The Euro to Japanese Yen exchange rate is currently trending in the region of 137.5808.

Monday’s European domestic data publications indicated yet more declination in German economic standing. Whilst the German Gross Domestic Product data met with forecast figures the Capital Investment, Construction Investment, Domestic Demand, Government Spending, Imports and Private Consumption all failed to meet with expectations.

Japanese economic data on Monday was similar to that of the European data in that the majority of the publications failed to meet with expectations.

Capital Spending was forecast to drop from the previous percentage of 7.4% to 4.1% but the actual data showed further declination to 3.0%.

Company profits showed a huge deterioration printing at 4.5% having reached 20.2% previously. The Manufacturing PMI, Company Sales and Vehicle Sales all declined from the previous figures.

The Euro to Japanese Yen exchange rate has hit a low today of 136.9033.

Despite a lack of influential, market moving data on Tuesday the Euro has gained against many of its peers. The exact reasons for this are unclear, but it might be a reversal in trader reaction to the possibility of European Central Bank stimulus methods. Having pulled away from the Euro with a quantitative easing rhetoric becoming ever present, investors may feel that the new method of buying sovereign bonds may bode well for the European economy.

The Japanese Yen has fallen across the board today amid speculation that the pension fund will increase its holdings of equities and streamline its domestic bond assets. Gavin Friend, a currency strategist at National Australia Bank Ltd., commented stating; ‘The widely flagged changes in the Government Pension Investment Fund (GPIF) towards more risky assets suggest that the Yen continues to decline’.

Wednesday’s Forecast for the Euro to Japanese Yen Exchange Rate

Wednesday’s Japanese economic data publications will be of interest to those invested in the Yen. The Composite PMI registered a figure of 50.2 in July; only just above the level that separates growth from contraction. Similarly the Services PMI hit 50.4 in July which is dangerously close to contraction.

With a number of European economic data publications on Wednesday the Euro is likely to experience volatility. The Italian, French, German and Eurozone Composite and Services PMI’s may not have a huge weighting in terms of wider market movement, but they will be a good way to gauge economic standings.

Eurozone yearly Retail Sales will be of greater significance in terms of market movement. It is forecast to drop from the 2.4% figure recorded previously to 0.9%.

The Euro to Japanese Yen exchange rate has hit a high today of 137.7775.