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US Dollar (USD) Edges Higher Against Yen (JPY) as Markets Focus on ?Brexit? Possibility
Published: 20 Jun at 12 PM Tags: Pound Sterling, Dollar Exchange Rate, Currency Exchange, Euro Crisis, Yen Exchange Rate, UK, Exchange Rates,
The US Dollar to Japanese Yen (USD/JPY) exchange rate attempted recovery from last week’s bearish drops on Monday after investors flocked from the ‘safe-haven’ Yen to the British Pound, following a perceived shift towards ‘Remain’.
US Dollar (USD) Favour Remains Tepid after Last Week’s Data
While the US Dollar recovered against the Japanese Yen on Monday, it trailed lower against many other majors as favour for the ‘Greenback’ remained low following last week’s session.
The ‘Ninja’ exchange rate plummeted to its lowest point since August 2014 last Thursday; 103.7017. Since then the US Dollar has attempted to recover from its lows, but has been too weak to make considerable gains. At the time of writing, USD/JPY trended in the region of 104.4600.
The Federal Reserve decided to leave the key interest rate frozen at 0.50%, disappointing investors who had hoped for an interest rate hike. The weak US Dollar struggled further in the following days as influential data printed below expectations.
May’s US Consumer Price Index (CPI) let down expectations of 0.3%, by halving from 0.4% to 0.2%. The year-on-year figure also disappointed, by slipping from an expected 1.1% to 1.0%.
Jobless claims came in worse-than-expected. 277k new claims were made following the previous report’s figure of 264k, and the number of continuing claims increased from 2112k to 2157k.
Friday’s data may have allowed the US Dollar to recover slightly, as housing starts merely contracted by -0.3% despite being forecast to plummet -1.9%.
Japanese Yen (JPY) Hit Hardest by British Pound Rally
The Japanese Yen has recently rallied across the board due to market perception that it has been the safest of the ‘safe-haven’ currencies.
Risk movement had been decidedly off in the last few weeks as commodity prices fell, US Dollar sentiment plummeted and bets of a possible ‘Brexit’ rose.
As a result, the Yen has soared across the board, despite warnings from the Japanese government that they would intervene in the foreign exchange market to keep the Yen from becoming overvalued.
The strength of the Yen has even caused problems for Japanese exporters, causing the nation to fall back into a trade deficit according to DW.
However, as both the Pound and the US Dollar recovered against the Yen on Monday, the Yen was hit especially hard from the shift to risk-on movement. Japanese stocks also improved on Monday following the weakening Yen.
US Dollar to Japanese Yen (USD/JPY) Exchange Rate Forecast: Will Japanese Intervention be Necessary?
Some economists are predicting that due to the US’s economic ties with Britain, both the Pound and the US Dollar could rally against the Japanese Yen in the event of a ‘Remain’ vote.
Gareth Berry, a foreign-exchange strategist from Singapore, stated;
‘The combination of a higher pound against the dollar with a higher Dollar-Yen too means the Pound-Yen cross will travel further than either pair combined. That’s a mathematical certainty.’
However, the event of a ‘Brexit’ could have the opposite effect and could lead the Japanese Yen to increase in value more than any other major, and could even surge past 100 yen per Dollar towards 90 yen per Dollar.
If this were to happen, the Bank of Japan (BoJ) would be increasingly likely to cooperate with the US and intervene with the USD/JPY exchange rate. According to former Japanese Finance Ministry official, Eisuke Sakakibara;
‘If it breaks ¥100, Bank of Japan intervention is possible, but in order to intervene in the markets, you have to get agreement from the United States, and at this level — ¥104, ¥105 — I don’t think the U.S. would agree.
But if it breaks ¥100 and heads toward ¥90, it is possible that the US authorities and Japanese authorities agree on the Japanese intervention.’
Regardless, ‘Ninja’ investors will likely stay focused on Britain’s EU Referendum this coming Thursday, as the result is likely to have a considerable effect on the Yen’s strength across the board.
At the time of writing, the US Dollar to Japanese Yen (USD/JPY) exchange rate trended in the region of 104.4600, while the Japanese Yen to US Dollar (JPY/USD) exchange rate traded at around 0.0096.
US Dollar (USD) Favour Remains Tepid after Last Week’s Data
While the US Dollar recovered against the Japanese Yen on Monday, it trailed lower against many other majors as favour for the ‘Greenback’ remained low following last week’s session.
The ‘Ninja’ exchange rate plummeted to its lowest point since August 2014 last Thursday; 103.7017. Since then the US Dollar has attempted to recover from its lows, but has been too weak to make considerable gains. At the time of writing, USD/JPY trended in the region of 104.4600.
The Federal Reserve decided to leave the key interest rate frozen at 0.50%, disappointing investors who had hoped for an interest rate hike. The weak US Dollar struggled further in the following days as influential data printed below expectations.
May’s US Consumer Price Index (CPI) let down expectations of 0.3%, by halving from 0.4% to 0.2%. The year-on-year figure also disappointed, by slipping from an expected 1.1% to 1.0%.
Jobless claims came in worse-than-expected. 277k new claims were made following the previous report’s figure of 264k, and the number of continuing claims increased from 2112k to 2157k.
Friday’s data may have allowed the US Dollar to recover slightly, as housing starts merely contracted by -0.3% despite being forecast to plummet -1.9%.
Japanese Yen (JPY) Hit Hardest by British Pound Rally
The Japanese Yen has recently rallied across the board due to market perception that it has been the safest of the ‘safe-haven’ currencies.
Risk movement had been decidedly off in the last few weeks as commodity prices fell, US Dollar sentiment plummeted and bets of a possible ‘Brexit’ rose.
As a result, the Yen has soared across the board, despite warnings from the Japanese government that they would intervene in the foreign exchange market to keep the Yen from becoming overvalued.
The strength of the Yen has even caused problems for Japanese exporters, causing the nation to fall back into a trade deficit according to DW.
However, as both the Pound and the US Dollar recovered against the Yen on Monday, the Yen was hit especially hard from the shift to risk-on movement. Japanese stocks also improved on Monday following the weakening Yen.
US Dollar to Japanese Yen (USD/JPY) Exchange Rate Forecast: Will Japanese Intervention be Necessary?
Some economists are predicting that due to the US’s economic ties with Britain, both the Pound and the US Dollar could rally against the Japanese Yen in the event of a ‘Remain’ vote.
Gareth Berry, a foreign-exchange strategist from Singapore, stated;
‘The combination of a higher pound against the dollar with a higher Dollar-Yen too means the Pound-Yen cross will travel further than either pair combined. That’s a mathematical certainty.’
However, the event of a ‘Brexit’ could have the opposite effect and could lead the Japanese Yen to increase in value more than any other major, and could even surge past 100 yen per Dollar towards 90 yen per Dollar.
If this were to happen, the Bank of Japan (BoJ) would be increasingly likely to cooperate with the US and intervene with the USD/JPY exchange rate. According to former Japanese Finance Ministry official, Eisuke Sakakibara;
‘If it breaks ¥100, Bank of Japan intervention is possible, but in order to intervene in the markets, you have to get agreement from the United States, and at this level — ¥104, ¥105 — I don’t think the U.S. would agree.
But if it breaks ¥100 and heads toward ¥90, it is possible that the US authorities and Japanese authorities agree on the Japanese intervention.’
Regardless, ‘Ninja’ investors will likely stay focused on Britain’s EU Referendum this coming Thursday, as the result is likely to have a considerable effect on the Yen’s strength across the board.
At the time of writing, the US Dollar to Japanese Yen (USD/JPY) exchange rate trended in the region of 104.4600, while the Japanese Yen to US Dollar (JPY/USD) exchange rate traded at around 0.0096.
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Source: moneytransfer.co.uk