- The Japanese Yen meets a new offer in reaction to the disappointing data of the trade balance.
- The reduction of bets due to an immediate increase in BOJ rates and a positive risk tone weighs even more on the JPY.
- The renewed purchase of USD further supports the USD/JPY torque and contributes to the upward movement.
The Japanese Yen (JPY) extends his constant intra -field during Thursday’s Asian session, which, together with a good rebound in the demand of the US dollar (USD), elevates the USD/JPY to the torque of 148.50 in the last hour. The most early published data showed that Japan recorded a commercial surplus less than expected in June in the middle of a continuous drop in exports. In addition, the slow economic growth in Japan, the fall of real wages, signs of cooling of inflation and internal political uncertainty could complicate the path of normalization of the Bank of Japan’s policy (BOJ). This, in turn, is considered a key factor that weighs on the JPY.
Meanwhile, most Asian shares markets followed the positive turn of the previous night on Wall Street, which followed the denial of the US president, Donald Trump, of the reports that he was close to saying goodbye to the president of the Federal Reserve (Fed), Jerome Powell. This seems further undermining JPY’s safe refuge status. The US dollar (USD), on the other hand, recovers positive traction and reverses Wednesday’s decline from its highest level since June 23 amid the growing acceptance that the Fed would delay the reduction of rates. This contributes to the upward movement of the USD/JPY torque and supports the case for an extension of a well -established alkist trend in the short term.
Japanese yen continues to lose ground amid bets reduced by an increase in boxwoods
- Government data published earlier this Thursday showed that Japan’s commercial surplus stood at ¥ 153.1 billion in June, marking a remarkable improvement with respect to the ¥ 638.6 billion deficit seen in the previous month. However, the reading was below the expectations of a surplus of ¥ 353.9 billion, since exports fell for the second consecutive month.
- Japan exports fell 0.5% year -on -year amid a weak external demand, especially in the main market, China, reflecting the sustained impact of US tariffs. However, imports improved substantially after a 7.7% drop in May and grew 0.2% year -on -year compared to the expectations of a 1.6% drop, indicating signs of recovery in domestic demand.
- Meanwhile, recent surveys indicate that the ruling coalition of Japan – the Democratic Liberal Party (LDP) and Komeito – could lose its majority in the elections of the Upper House on July 20. The result could further increase fiscal and political risks in Japan and also complicate trade negotiations amid the imminent commercial US trade tariffs.
- In fact, US President Donald Trump issued tariff notices to more than 20 commercial partners, including Japan, facing a 25% tariff over all exports to America in the midst of stagnant trade negotiations between the US and Japan. This adds to the fall of real wages and signs of cooling of inflation in Japan, which justifies the caution of the Bank of Japan in the short term.
- Investors now seem convinced that the BOJ will give up increasing interest rates this year. In addition, operators have been reducing their expectations of an immediate cuts of fees by the Federal Reserve in the midst of signs that the growing taxes on Trump administration are impacting on consumer prices.
- The president of the Fed in New York, John Williams, warned Wednesday that the impact of commercial tariffs is barely beginning to affect the economy. Williams added that the current moderately restrictive monetary policy is in the right place to allow central bankers to monitor the economy before taking their next steps.
- Separately, the president of the Fed of Dallas, Lorie Logan, said that the US Central Bank will probably need to keep interest rates for a time to ensure that inflation is kept low. Logan also noted that tariff increases seem prone to creating inflationary pressure, and the Fed wants to see that low inflation continues to be convinced.
- Trump contradicted the reports of the media that he planned to dismiss the president of the FED, Jerome Powell, and acknowledged that many have said that such movement would disturb the markets. However, Trump said he would love that Powell renounce and unleashed new criticism against the Fed Chief to keep the high rates.
- The operators now look at the US macroeconomic data – monthly retail sales figures, the usual weekly applications of unemployment subsidy and the manufacturing index of the Fed of Philadelphia – in search of some impetus. In addition, the Speeches of influential members of the FOMC will boost the USD/JPY PAR before the Japan National CPI report on Friday.
The USD/JPY’s bullish technical configuration supports the case for a movement beyond 149.00
From a technical perspective, the USD/JPY torque showed some resistance below the single mobile (SMA) average of 100 hours on Wednesday, and the subsequent upward movement favors upward operators. In addition, the oscillators remain comfortably in positive territory and are still far from being in the overcompra zone, suggesting that the path of lower resistance for cash prices is upward. Therefore, some force of continuation of return to the 149.00 mark, en route to the maximum of the previous night near the region of 149.15-149.20, it seems a different possibility. The ascending trajectory could extend even more towards the recovery of the psychological level of 150.00 for the first time since the end of March.
On the contrary, the round figure of 148.00 seems to protect the immediate side down before the minimum of the Asian session, around the 147.70 region. The latter approaches the 100 -hour SMA, below which the USD/JPY It could re -test levels below 147.00. Some continuation sales could change the bias in favor of the bearish operations and drag cash prices towards the intermediate support of 146.60 en route to the 146.20 zone, the level of 146.00 and the 100 -day SMA support, currently located near the 145.80 region.
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.
