- The dollar remains stable in front of the Yen in a quiet market session.
- Investors observe from the barrier, waiting for news from the meeting between the USA and China.
- The moderate comments of the governor of the Boj, Ueda, have questioned the expectations of raising rates.
The US dollar is being negotiated without a clear bias, for the second consecutive day, against Japanese yen. The doji candles in the daily chart highlight the reluctance of investors to carry out directional bets while representatives of the United States and China negotiate a commercial agreement.
Positive comments from US President Trump and the director of the Economic Council, Kevin Hassett, keep the hopes of a satisfactory result alive, but the operators observe from the barrier, waiting for news about more concrete advances.
The two largest economies in the world seek to return to the spirit of last week’s meeting in Geneva, which led to a significant reduction of their reciprocal tariffs. This time, however, an agreement requires concessions in thorny aspects, such as rare earth trade or chips exports.
In Japan, the governor of the Boj, Ueda, said that the bank will rise again when they are sure that inflation is approaching 2%, which generates doubts about greater monetary tightening in the coming months and adds bearish pressure on the Japanese yen.
These comments have compensated for the optimism of investors on a better Japanese Gross Domestic Product than expected, which remained flat in the first quarter after a 0.2% contraction in the previous quarter, exceeding the expectations of another economic deceleration of 0.2%.
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.
