- The USD/JPY goes back while the US dollar wins for the support of the Fed to a restrictive policy stance.
- The tariff policies of US President Trump are expected to boost inflation in the US and weigh on economic growth.
- The Japan National CPI cooled in February.
The USD/JPY pair yields all intradic earnings after facing sales pressure around 149.60 and falls to about 148.60 during negotiation hours in North America on Friday. The asset falls as the US dollar (USD) wins, with the dollar index (DXY) rising to about 104.00.
The dollar attracts offers since the Federal Reserve (Fed) is unlikely to cut interest rates in the short term. On Wednesday, the president of the FED, Jerome Powell, declared that they are not in a hurry to cut the interest rates in the midst of an “unusually high” uncertainty about the economic perspectives of the United States (USA) under the leadership of President Donald Trump. Powell also warned that Donald Trump’s tariff policy tends to reduce growth and increase inflation.
During the negotiation hours in North America on Friday, the president of the Bank of the Fed of Chicago, Austan Goolsbee, and the president of the Bank of the Fed of New York, Jon Williams, indicated that the current policy of interest rates is appropriate since the Central Bank lacks clarity on Trump’s economic policies.
Looking ahead, investors will focus on the preliminary data of the S&P global US S& P Index for March, which will be published on Monday.
In the Asia-Pacific region, the weak data of the National Consumer Price Index (IPC) for February have weighed over the Japanese Yen (JPY). The general national CPI rose 3.7%, slower than the growth of 4% observed in January. The national CPI excluding fresh foods, which is closely followed by the officials of the Bank of Japan (BOJ), grew at a faster rate than expected of 3%, but the rhythm remained moderate with respect to the previous reading of 3.2%.
However, the operators remained confident that the BOJ will harden further monetary policy this year since the largest trade union group in Japan, Rengo, showed that companies agreed to increase salary growth by 5.4% this year.
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.
