- The EUR/JPY extends the rally about 167.50 in the first bars of the European session on Friday.
- Akazawa said that commercial negotiations with the US “remain in the fog” despite the efforts of both parties to reach an agreement.
- Japan’s National Annual CPI remained well above the 2% target of the BOJ in May.
The EUR/JPY crossing attracts some buyers around 167.50 during the European session on Friday. The uncertainty on the time of the next rise in rates of the Bank of Japan (Boj) weighs on the Japanese yen (JPY). The Economic Bulletin and the Preliminary Reading of Consumer Confidence of the Eurozone will be published later on Friday.
The governor of the Boj, Kazuo Ueda, said on Tuesday that the short -term attention of the Central Bank was on the downward risks for the economy of Japan, with the impact of US tariffs. Which is expected to get worse in the second half of this year. This comment suggests that the Japanese Central Bank is in no hurry to start climbing the fees, which undermines the JPY and acts as a tail wind for the crossing.
In addition, uncertainty about tariffs between the US and Japan could contribute to the weakness of the JPY. The main commercial negotiator of Japan, Ryosei Akazawa, said Friday that Japan will not be fixed on the imminent date so that the so -called reciprocal tariffs return to higher levels. Akazawa added that commercial negotiations with the US “remain in the fog” despite the efforts of both parties to reach an agreement.
The hard line tone around the policy perspectives of the European Central Bank (ECB) has raised the shared currency. The president of the ECB, Christine Lagarde, said that rates reductions are coming to an end, since the Central Bank is now “in a good position” to face the prevailing uncertainties.
The data published by the Japan Statistics Office on Friday showed that the National Consumer Price Index (ICC) of the country increased 3.5% year -on -year in May, compared to the previous 3.6% reading. Meanwhile, the national CPI without fresh food stood at 3.7% year -on -year in May compared to the previous 3.5%. The figure was above the market consensus of 3.6%. Finally, the CPI without fresh food and energy rose 3.3% year -on -year in May, compared to the previous 3.0% reading. This reading could provide some support to the JPY and limit the bullish potential of the crossing.
And in Japanese faqs
The Japanese Yen (JPY) is one of the most negotiated currencies in the world. Its value is determined in general by the march of the Japanese economy, but more specifically by the policy of the Bank of Japan, the differential between the yields of the Japanese and American bonds or the feeling of risk among the operators, among other factors.
One of the mandates of the Bank of Japan is the currency control, so its movements are key to the YEN. The BOJ has intervened directly in the currency markets sometimes, generally to lower the value of YEN, although it abstains often due to the political concerns of its main commercial partners. The current ultralaxy monetary policy of the BOJ, based on mass stimuli to the economy, has caused the depreciation of the Yen in front of its main monetary peers. This process has been more recently exacerbated due to a growing divergence of policies between the Bank of Japan and other main central banks, which have chosen to abruptly increase interest rates to fight against inflation levels of decades.
The position of the Bank of Japan to maintain an ultralaxa monetary policy has caused an increase in political divergence with other central banks, particularly with the US Federal Reserve. This favors the expansion of the differential between the American and Japanese bonds to 10 years, which favors the dollar against Yen.
The Japanese Yen is usually considered a safe shelter investment. This means that in times of tension in markets, investors are more likely to put their money in the Japanese currency due to their supposed reliability and stability. In turbulent times, the Yen is likely to be revalued in front of other currencies in which it is considered more risky to invest.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
