- The EUR/JPY regains losses and stabilizes around 163.00, while the GDP data of the first quarter of Japan were weaker than expected.
- Nakamura del Boj warns of economic risks due to the repercussions of tariffs imposed by the US
- Kazaks of the ECB expects two more cuts of interest rates, it provides that the rate of deposition decreases to 1.75%.
The EUR/JPY pair is around 163.00 after recovering its initial losses during negotiation hours in North America on Friday. The Cruce bounces while the Japanese Yen (JPY) faces a slight sales pressure, after the publication of the data of the Gross Domestic Product (GDP) of the first quarter of Japan.
The Japanese cabinet office reported that the economy contracted 0.2% in the first quarter of the year, faster than expected, which was 0.1%. In annualized terms, the economy was reduced at a faster rate of 0.7%, compared to estimates of a 0.2%drop. In the first quarter of 2024, the economy grew at a robust rate of 2.2%.
The weak GDP data to the Bank of Japan (BOJ) is expected to increase interest rates in the future. Earlier in the day, the member of the Boj Board, Toyoaki Nakamura, warned about the growing downward risk for the economy due to the repercussions of tariffs imposed by the president of the United States (USA), Donald Trump, who have caused global economic uncertainty.
Meanwhile, the Euro (EUR) quietly quotes while investors ignore the firm expectations that the European Central Bank (ECB) will cut interest rates again at the June policy meeting. ECB officials have argued in favor of further reducing interest rates due to economic risks in the Eurozone and confidence that the disinflation tendency remains intact.
During European negotiation hours, the Governing Council member of the ECB, Martins Kazaks, said there could still be a couple of reductions in the deposit rate this year since its current level of 2.25%, Bloomberg reported.
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.
