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Japanese Yen (JPY) Softer Against Pound, Holds Gains Against US Dollar
Published: 27 Mar at 4 PM Tags: Pound Sterling, Euro Exchange Rate, Dollar Exchange Rate, Australian Dollar Exchange Rate, Currency Exchange, Forex, Euro Crisis, Yen Exchange Rate, UK, Exchange Rates, Economy, Inflation,
The Pound to Japanese Yen currency pair advanced on Friday as two high-profile officials from the Bank of England supported UK interest rate hike expectations. The GBP/JPY exchange rate climbed by 0.3% to hit a high of 177.9300 during the European session after BoE Governor Mark Carney intimated that interest rates will be increased rather than cut in the near future. The central bank’s deputy governor also insinuated that the UK economy has nothing to fear from deflation, despite the risk of negative rates currently being one of the main factors restraining positive rate revisions.
The remarks bolstered demand for the Pound and the British asset rallied against a number of its rivals, including the Yen. However, the Yen was able to hold its own against the US Dollar as US fourth quarter growth data showed expansion of 2.2% at the end of 2014 rather than the 2.4% growth predicted by economists. Earlier this week the Japanese Yen surged against almost all of its peers as demand for safe-haven assets increased in response to the conflict between Yemen and Saudi Arabia. However, the Yen retraced its steps in the wake of the release of domestic inflation data. Japan’s Core Consumer Price Index fell to 0% in February, the first zero reading since May 2013.
According to analysts from Credit Suisse; ‘Electricity and gas charges are expected to start declining from April onwards, putting larger downward pressures on the core CPI inflation rate going forward.’ Low core inflation might come with some benefits, such as spurring consumer spending, but it could also undermine the Bank of Japan’s efforts to bolster growth with extensive stimulus.
Next week the Japanese reports to focus on include the nation’s industrial production, construction orders, and housing starts figures. The Markit JMMA Manufacturing PMI will be of particular interest to those trading with the Japanese Yen. UK news will also influence the direction taken by the GBP/JPY exchange rate, as will the threat of further unrest in Yemen and US Fed rate hike bets.
The remarks bolstered demand for the Pound and the British asset rallied against a number of its rivals, including the Yen. However, the Yen was able to hold its own against the US Dollar as US fourth quarter growth data showed expansion of 2.2% at the end of 2014 rather than the 2.4% growth predicted by economists. Earlier this week the Japanese Yen surged against almost all of its peers as demand for safe-haven assets increased in response to the conflict between Yemen and Saudi Arabia. However, the Yen retraced its steps in the wake of the release of domestic inflation data. Japan’s Core Consumer Price Index fell to 0% in February, the first zero reading since May 2013.
According to analysts from Credit Suisse; ‘Electricity and gas charges are expected to start declining from April onwards, putting larger downward pressures on the core CPI inflation rate going forward.’ Low core inflation might come with some benefits, such as spurring consumer spending, but it could also undermine the Bank of Japan’s efforts to bolster growth with extensive stimulus.
Next week the Japanese reports to focus on include the nation’s industrial production, construction orders, and housing starts figures. The Markit JMMA Manufacturing PMI will be of particular interest to those trading with the Japanese Yen. UK news will also influence the direction taken by the GBP/JPY exchange rate, as will the threat of further unrest in Yemen and US Fed rate hike bets.
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Source: moneytransfer.co.uk