Overnight, USD/JPY briefly traded above the 80 level - for the first time in almost two weeks - before falling back to 79.65 after meeting a wall of exporter orders. Over recent weeks, USD/JPY has been tracking the 50d moving average like a magnet in the absence of any really meaningful fundamental developments and with traders shy of taking on risk. Against a backdrop of subdued risk appetite, and with the US economy losing momentum, there is a sense that the Japanese yen has some decent underlying buying support. In addition, the local economy in Japan is doing better than most other advanced economies. For instance, the BoJ’s latest quarterly report raised the economic assessment for each of the nine regions, while BoJ Governor Shirakawa claimed overnight that the economy was improving again. As a result, a further easing of monetary conditions from the BoJ might now be put off, at a time when each of the Fed, the BoE and the ECB are either contemplating further measures or have recently implemented them.
So far in 2012, the Japanese yen is the worst-performing major currency, with the exception of the BRL. It would not be surprising if it was one of the better performers in the current half-year.