- The USD/JPY collapses below 150.00 in the midst of the pure strength of the Japanese Yen before the growing hard line bets of the Boj.
- Investors expect the tariff agenda of US President Trump to be less disruptive.
- The US dollar falls after failing to maintain the profits of Monday, driven by the optimistic preliminary data of the PMI of Global S&P services for March.
The USD/JPY pair is falling significantly to about 149.70 during the North American negotiation hours on Tuesday. The pair collapses since the Japanese yen (JPY) surpasses its peers in expectations that the Bank of Japan (Boj) will increase interest rates this year again.
The governor of the Boj, Kazuo Ueda, said on Monday that the adjustments in monetary policy would become appropriate if the Central Bank achieves its inflation target of 2%. Meanwhile, the optimism about more salary increases has also promoted the expectations of a more Hawkish Boj. Last week, the largest union group in Japan, Rengo, showed that companies agreed to increase salary growth by 5.4% this year.
And in Japanese price today
The lower table shows the rate of change of Japanese Yen (JPY) compared to the main currencies today. The Japanese Yen was the strongest currency against the US dollar.
| USD | EUR | GBP | JPY | CAD | Aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.06% | -0.13% | -0.58% | -0.07% | -0.42% | -0.15% | -0.23% | |
| EUR | 0.06% | -0.07% | -0.53% | -0.02% | -0.33% | -0.10% | -0.18% | |
| GBP | 0.13% | 0.07% | -0.47% | 0.06% | -0.26% | -0.02% | -0.15% | |
| JPY | 0.58% | 0.53% | 0.47% | 0.51% | 0.21% | 0.43% | 0.34% | |
| CAD | 0.07% | 0.02% | -0.06% | -0.51% | -0.30% | -0.08% | -0.21% | |
| Aud | 0.42% | 0.33% | 0.26% | -0.21% | 0.30% | 0.24% | 0.14% | |
| NZD | 0.15% | 0.10% | 0.02% | -0.43% | 0.08% | -0.24% | -0.13% | |
| CHF | 0.23% | 0.18% | 0.15% | -0.34% | 0.21% | -0.14% | 0.13% |
The heat map shows the percentage changes of the main currencies. The base currency is selected from the left column, while the contribution currency is selected in the upper 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 picture will represent the JPY (base)/USD (quotation).
Meanwhile, the US dollar (USD) falls sharply since investors expect the tariff agenda of the US president, Donald Trump, to have a lower impact than anticipated above. Trump said Monday that he could give “many countries” exemptions in tariffs. The limited scope of the tariff war decreases the attractiveness of safe refuge of the US dollar. The American dollar index (DXY), which tracks the value of the dollar against six main currencies, falls abruptly to about 104.00 after failing to extend its rise above 104.50.
On Monday, the US dollar won strongly after the publication of the preliminary data of the Global S&P S&P (PMI) Index index for March, which showed that the robust activity of the services sector contributed significantly to a strong increase in the compound PMI. The PMI of Services, which accounts for activities in the services sector, stood at 54.3, significantly above the estimates of 51.2 and 51.0.
This week, investors will focus on the data of the US Personal Consumption Expenditure Index (PCE) for February, which will be published on Friday. Investors will pay close attention to inflation data, since it is the inflation indicator preferred by the Federal Reserve (Fed) and will probably influence market speculation about monetary policy perspectives.
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.
