Week in FX Asia – After G20 Aso Comments Will Have Been Forgotten

The market may be confused about what Japan's Finance Minister Aso said or did not say. However, no one can be confused about Abeconomics and what it is supposed to achieve. Japan was very much likely to, and may still do, come under pressure at the upcoming G20 meeting, February 15–16, to slow down the pace of Yen's weakness.

So what are Japanese officials to do? Do what the Chinese like to do before visiting US dignitaries land ashore. They apply ‘smoke and mirror tactics' and gently guide the CNY higher. It's all about perception. It seems that Finance Minister Aso has become Japans sacrificial lamb. His comments that the yen had weakened more than the officials expected or intended to expresses his governments desire to make some G20 friendly comments.

Aso remarks are only stalling the inevitable, a weaker yen. The two-way action seen since his questionable ‘faux pas' has promoted a timely correction, it will not stop the market trend....