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Forex Today: Japanese yen falls as BoJ maintains policy adjustments

Here’s what you need to know on Friday, June 14:

The Japanese Yen (JPY) remains under selling pressure on Friday as markets evaluate the Bank of Japan’s (BoJ) monetary policy announcements. The US economic calendar will include Export Price Index and Import Price Index data for May. Later in the session, the University of Michigan will release the preliminary Consumer Sentiment Index for June.

The BoJ kept its policy rate unchanged at 0% for the second consecutive meeting in June, as widely anticipated. The BoJ also made no changes to its massive 6 trillion JPY ($38.14 billion) monthly Japanese government bond (JGB) purchasing program. However, the bank announced that it will hold a meeting with bond market participants and decide on a specific bond purchase reduction plan for the next 1-2 years at the next monetary policy meeting in July. At the press conference after the meeting, Governor Kazuo Ueda explained that it is important to reduce JGB purchases in a predictable manner, while ensuring flexibility to take into account stability in the bond market.

PRICE of the Japanese Yen Today

The table below shows the percentage change of the Japanese Yen (JPY) against the major currencies listed today. The Japanese Yen was the weakest against the US Dollar.

USD 0.18% 0.28% 0.68% 0.05% 0.29% 0.51% 0.06%
EUR -0.18% 0.10% 0.58% -0.15% 0.09% 0.31% -0.12%
GBP -0.28% -0.10% 0.46% -0.23% 0.02% 0.21% -0.21%
JPY -0.68% -0.58% -0.46% -0.65% -0.41% -0.22% -0.62%
CAD -0.05% 0.15% 0.23% 0.65% 0.25% 0.44% 0.00%
AUD -0.29% -0.09% -0.02% 0.41% -0.25% 0.21% -0.24%
NZD -0.51% -0.31% -0.21% 0.22% -0.44% -0.21% -0.42%
CHF -0.06% 0.12% 0.21% 0.62% -0.01% 0.24% 0.42%

The heat map shows the percentage changes of the major currencies against each other. The base currency is chosen from the left column, while the quote currency is chosen from the top row. For example, if you choose the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change shown in the box will represent JPY (base)/USD (quote).

USD/JPY built up bullish momentum following the BoJ event and was last seen rising 0.6% on the day around 158.00. Reflecting the widespread selling pressure around the JPY, EUR/JPY rose 0.4% to 169.30.

Meanwhile, the US dollar (USD) continues to gain strength against its rivals following the sharp drop seen after Wednesday’s subdued inflation data. The risk-off atmosphere in the market, the sharp decline seen in the JPY and the lack of demand for European currencies amid political turmoil, appear to be helping the USD capture capital outflows. At press time, the Dollar Index was trading at its highest level since early March, up 0.25% on the day near 105.50.

EUR/USD remains under strong bearish pressure in the European session and falls towards 1.0700.

After breaking a three-day winning streak on Thursday, GBP/USD continues to push lower early on Friday and was last seen trading below 1.2750.

Despite broad-based USD strength, XAU/USD is holding on to small daily gains around $2,310. Gold appears to be benefiting from risk aversion ahead of the weekend.

Risk sentiment FAQs

In the world of financial jargon, the two terms “risk appetite (risk-on)” and “risk aversion (risk-off)” refer to the level of risk that investors are willing to bear during the investment period. reference. In a “risk-on” market, investors are optimistic about the future and are more willing to buy risky assets. In a “risk-off” market, investors begin to “play it safe” because they are worried about the future and, therefore, buy less risky assets that are more certain to provide a return, even if it is relatively modest.

Typically, during periods of “risk appetite”, stock markets rise, and most commodities – except gold – also appreciate as they benefit from positive growth prospects. The currencies of countries that are large exporters of raw materials strengthen due to increased demand, and cryptocurrencies rise. In a “risk-off” market, Bonds rise – especially major government bonds -, Gold shines and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar benefit.

The Australian Dollar (AUD), Canadian Dollar (CAD), New Zealand Dollar (NZD) and minor currencies such as the Ruble (RUB) and the South African Rand (ZAR) tend to rise in markets where there is “appetite for risk.” This is because the economies of these currencies rely heavily on commodity exports for their growth, and these tend to rise in price during periods of “risk appetite.” This is because investors anticipate higher demand for raw materials in the future due to increased economic activity.

The major currencies that tend to rise during periods of “risk aversion” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The Dollar, because it is the world’s reserve currency and because in times of crisis investors buy US public debt, which is considered safe because it is unlikely that the world’s largest economy will go into default. The Yen, due to the increase in demand for Japanese government bonds, since a large proportion is in the hands of domestic investors who are unlikely to get rid of them, even in a crisis. The Swiss franc, because strict Swiss banking legislation offers investors greater capital protection.

Source: Fx Street

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