Currency War Continues… Yen Rises on Obama administration comments China Data

by Joe Oliver, Forex Trading-Pips

The Yen traded higher against all but one of the most actively traded currencies early Monday following disappointing Chinese growth data and announcement last Friday the Obama Administration will ‘closely monitor’ Japanese governments policy of weakening the yen and ‘continue to press Japan to refrain from competitive devaluation and targeting its exchange rate for competitive purposes.’

Recent comments on the Yen from BK Asset Management…

USD/JPY extended its losses to trade below 98. Last night’s softer Chinese economic reports may have contributed to a general sense of risk aversion that has also hurt the currency pair but short Yen traders grew nervous after a report from the U.S. Treasury that was released late Friday. In their semi-annual report on currencies,” the Treasury said “We will continue to press Japan to adhere to the commitments agreed in the G-7 and G-20, to remain oriented towards meeting respective domestic objectives using domestic instruments and to refrain from competitive devaluation and targeting its exchange rate for competitive purposes.” Some investors interpreted this to mean that the U.S. will criticize Japan’s policies but with the weaker Yen being a byproduct of monetary policy and not currency intervention, it may be difficult for the U.S. to justify doing so accurately….More at Why Foreigners Won’t be Dumping Dollars for Long

The US treasury report also raised issue with China stating the ‘recent resumption of intervention on a large scale is troubling’.

Disappointing data released from China overnight has seen a collapse in precious metals and other industrial commodities early Monday morning.

George Soros shares his thoughts on the RMB and why gold is no longer a safe haven in a recent interview with South China Morning Post…

The RMB

Q: What do you think about the internationalistion of the RMB? Will it become a world currency in the future?

A: At sometime in the future, yes. But the government is eager to see the RMB being used in international transactions, but not to allow the international market to be too closely connected to the domestic market. And I actually approve of that policy because it has protected China from external shocks creating too much trouble internally. And I think it is quite a wise policy. But the domestic market will have to become much more mature and the international markets will also need to be better controlled, become more stable, before the RMB would become a global currency.

Gold

Q: What is your view on gold?

A: That’s a complicated question. It has disappointed the public, because it is meant to be the ultimate safe haven. But when the euro was close to collapsing in the last year, actually gold went down, because if people needed to sell something, they could sell gold. Therefore they sold gold. So gold went down together with everything else.

Gold was destroyed as a safe haven, proved to be unsafe. Because of the disappointment, most people are reducing their holdings of gold. But the central banks will continue to buy them, so I don’t expect gold to go down. If you have the prospect of a crisis, you will have occasional flurries or jumps. So gold is very volatile on a day-to-day basis, no trend on a longer-term basis….More at Interview With George Soros