- The EUR/JPY quotes in a positive tone around 171.00 in the Asian session on Monday.
- Ueda del Boj said it will carefully consider the moment of rates.
- The ECB is expected to delay its rate cuts this year.
The EUR/JPY crossroads gains impulse about 171.00 during Monday’s Asian negotiation hours. The Japanese Yen (JPY) weakens in front of the euro (EUR) in the midst of reduced expectations of rates of the Bank of Japan (BOJ) and the political uncertainty in Japan. The minutes of the BOJ monetary policy meeting will be published later on Tuesday.
The governor of the Boj, Kazuo Ueda, left investors last week by guessing on the time of the next rise in Boj’s interest rates with comments that reduced the expectations of a short -term movement and depreciated the JPY. Ueda said that the Japanese Central Bank will carefully evaluate the moment of its next increase in policy interest rates, since the uncertainty about economic and pricing trends in Japan and abroad remains high. In addition, internal political instability after the loss of the Democratic Liberal Party in the July 20 elections could further complicate the work of the BOJ and could contribute to the decline of the JPY.
In the front of the euro, the European Central Bank (ECB) is expected to delay its rate cuts this year, since it is projected that inflation is maintained above the short -term forecasts of the ECB. In addition, the optimistic data of the GDP of the Eurozone indicated that companies are adapting to commercial uncertainty. The operators will take more signs of the eurozone retail sales data for June, which will be published later on Thursday.
Japanese – frequent questions
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.
