Lee Hardman, Currency Analyst at MUFG, suggests that the yen has strengthened modestly overnight supported by more risk averse trading conditions as the rally in European and US equity markets has failed to extend into Asian equity markets which have declined modestly. Key Quotes “The PBoC raised the daily fixing rate for USD/CNY by the most in six weeks which has contributed to more risk-averse trading conditions during the Asian trading session. Investor concerns over slowing growth in China in the near-term have eased recently providing support for the Australian dollar and Latam currencies. The recent rebound in the price of crude oil prompted by the announcement that OPEC and non-OPEC countries are working together in an attempt to freeze output has provided some support for crude oil-related currencies as well in the near-term. The FT has reported comments as well from OPEC secretary general Abdalla El-Badri highlighting the likelihood that a reduction in OPEC output would likely be filled immediately by an increase in US shale output acting as a dampener on the price of crude oil. The positive yen sentiment overnight has been supported by comments from Japanese policymakers. Economy Minister Ishihara stated ahead of this week’s G20 meeting that Japan’s policies are not aimed at making the yen cheaper and that competitive devaluation is not desirable. Bloomberg has also run a report entitled “Kuroda hints at shift in thinking on monetary policy’s power” which fits in the markets’ building view that further BoJ easing is having a diminishing negative impact on the yen. The content of the report highlights comments today from Governor Kuroda in parliament stating that “it’s not that the monetary base along will pull up inflation or inflation expectations promptly…we aim to raise prices through an increase in inflation expectations and a tighter gap in supply and demand under QQE. The report states his remarks today contrast with more optimistic remarks when the QQE programme began in April 2013 when he stated that it was “the most appropriate” way to reach their inflation target and that “monetary policy alone” could achieve this. The euro has also underperformed early this week alongside although to a lesser extent than the pound. The fear of potential negative spill-over effects from Brexit for Europe is likely contributing to the euro’s underperformance.” For more information, read our latest forex news.