- The euro stands up in front of the Yen with a maximum of 167.60 at a short distance.
- Japanese inflation higher than expected has failed to support Yen.
- The minutes of the BOJ monetary policy meeting generate doubts about future fees.
The euro is being seen in front of the Japanese Yen for the second consecutive day on Friday, favored by a moderately more optimistic market feeling. The pair has failed to exceed 11 months, in 167.60, but it remains stable around 167.40 so far.
The US president, Donald Trump, reassured investors earlier today, stating that he will take two weeks to decide if he attacks Iran. These comments have promoted the idea that a large -scale regional war could be avoided, which is limiting the demand for safe shelters such as Yen, for the benefit of assets received as riskier, such as the euro.
A moderate box
In the macroeconomic front, the impact of the numbers of the Japanese IPC higher than expected has been moderate. The general inflation of Japan slowed at an annual pace of 3.5% in May, from 3.6% in April, but the underlying, more relevant inflation for the Central Bank, since it eliminates the seasonal impact of food and energy prices, accelerated to 3.7% from 3.5% of the previous month.
The minutes of the monetary policy meeting this week have highlighted the growing concerns about the downward risk for the economy derived from commercial uncertainties, which is taking some members of the Board to reconsider future increases in fees.
On Thursday, the governor of the Boj, Ueda, expressed doubts about a greater monetary hardening, citing the high commercial uncertainties in a moderate adjustment to his recent rhetoric and sent to the and down against his main peers.
Japan Faqs Bank
The Bank of Japan (BOJ) is the Japanese Central Bank, which sets the country’s monetary policy. Its mandate is to issue tickets and carry out monetary and foreign exchange control to guarantee the stability of prices, which means an inflation objective around 2%.
The Bank of Japan has embarked on an ultralaxa monetary policy since 2013 in order to stimulate the economy and feed inflation in the middle of a low inflation environment. The bank’s policy is based on the Quantitative and Qualitative Easing (QQE), or ticket printing to buy assets such as state or business bonds to provide liquidity. In 2016, the Bank redoubled its strategy and relaxed even more policy by introducing negative interest rates and then directly controlling the performance of its state bonds to 10 years.
The massive stimulus of the Bank of Japan 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 combat inflation levels that have been in historical maximums. Japan Bank’s policy to maintain low types has caused an increase in differential with other currencies, dragging the value of YEN.
The weakness of the YEN and the rebound in world energy prices have caused an increase in Japanese inflation, which has exceeded the 2% objective set by the Bank of Japan. Even so, the Bank of Japan judges that the sustainable and stable achievement of the 2%objective is not yet glimpsed, so an abrupt change of current monetary policy seems unlikely.
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.
