The Japanese yen lost ground against the majority of its peers yesterday, with the weakness caused by a couple of factors. Firstly, we saw monthly current account figures released for March showing that the surplus between exported and imported goods had shrunk to the lowest level on record. Japan posted a ¥116.4 billion surplus, amounting to only a fraction of the ¥305 billion forecast. Secondly, we saw an upturn in the Japanese stock market, which historically acts as a negative force on the traditionally safe-haven yen as traders sell off the currency in favour of riskier stocks. The only lifeline for the yen was the ongoing situation in Ukraine, which continues to put a relative dampener on demand for high-yielding, riskier assets.
The other mover throughout yesterday was the Indian rupee, which continues to gather momentum ahead of the election results announced on Friday. Initial opinion polls indicate that the Bharatiya Janata Party will secure the most seats, which is building confidence in Indian markets as it looks to spell the end for the reign of the current Congress Party, who have been blamed for economic slowdown and being caught up in a number of scandals. It is a big day for data releases today with the annual Australian budget, Chinese industrial production figures, and New Zealand retail sales. We also have a speech from the Reserve Bank of New Zealand later tonight.
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