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Yen to weaken further after Japan dodges G20 bullet - analyst

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02/18/2013 | 01:50pm CEST

Japan dodges the G20 bullet on its aggressive monetary policy, putting more pressure on the yen and sending the Nikkei close to a four-year high. James Hughes, chief market analyst at Alpari, expects the yen to weaken even further.



'We had the two statements, you have the G7 earlier last week, we have the G20. Those statements fairly similar, no surprises there necessarily but of course, it's this broad support for Japan and what they're doing with their monetary policy. Now of course, that's led the Nikkei to move higher. Very, very positive news for Japanese equity markets and we see the Nikkei really have a big move overnight. Of course, that's then negative for the Yen, so we've got that Dollar/Yen, which is this relentless move at the moment, which we really can't get anything - nothing can get in the way of it at the moment. We're approaching some big levels on that. But at the moment, it seems that that move is just relentless on the upside. We've seen something like four down weeks in the last five months or so. So it's a real big move that really does seem to be running ahead full of steam. And when it's supported by the G20 and G7 like it has been over the weekend, then in terms of fundamentals, it seems that there's nothing in the way.
(QUESTION: Okay. Well that's Japan, these markets. But here in Europe, I'm just looking - European market opening flat to lower. It doesn't seem to be there's much momentum from G20 feeding across and from Japan feeding into Europe today.)
Yeah. I think there's maybe a couple of reasons for that. I mean we did get a positive move in Asia overnight, Nikkei higher as we've already discussed. But of course, you've got with the one big thing that's happening today is that the U.S. is on holiday. Of course, we always see that. However, much we like to admit it or not, we need the U.S. markets to be open to get that volume in European markets. So that's not open to start off with. We've got a couple of big things going on today though, of course. I mean in the statement yesterday from the G20, we did get that hint towards the euro zone, maybe looking to having a little bit of leeway in terms of cutting rates again. However, that really hasn't come across into what we've seen in markets so far today. And we've also got Mario Draghi speaking today at the European Committee. He's going to be grilled on everything that's come out of that G20 meeting, of course. So there's maybe a little bit of caution ahead of that as well but it does seem - haven't got that volume in the U.S. That's the underlying fact that we're not necessarily going to get much volume in European markets today at all. (Okay)

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