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US Dollar to Japanese Yen (USD/JPY) Exchange Rate Holds Near Best Levels on Fed Bets
Published: 17 Oct at 2 PM Tags: Dollar Exchange Rate, Currency Exchange, Yen Exchange Rate, Exchange Rates, Economy,
The US Dollar to Japanese Yen exchange rate rested above the key level of 104.00 throughout the weekend and the pair still trends near highs not seen since July. Higher bets of a Federal Reserve rate hike in December have carried USD/JPY higher, but the pair’s movement was mixed on Monday as comments from Fed Chairwoman Yellen weighed on those bets.
US Dollar (USD) Maintains Strength on High Fed Rate Hike Bets
The US Dollar experienced a bullish run last week, advancing in almost every session throughout the week’s trade as bets that the Federal Reserve would hike US interest rates in December continued to rise. September’s domestic data supported USD further, seemingly improving from slumps seen in August.
Various factors have improved December’s Fed rate hike bets, including the aforementioned data as well as bets towards November’s US Presidential election.
Democrat nominee Hillary Clinton has been performing solidly in polls, giving investors hope that she will win the election and add to long-term market stability due to similarity between her economic policies and those of US President Barack Obama’s.
However, USD demand was a little more mixed on Monday as markets still readjusted to comments made by Fed Chairwoman Janet Yellen last Friday.
In a speech on the US’ economy, Yellen stated that current monetary policy was putting high pressure on the economy and helping it to stay resilient. She indicated that keeping it this way may be the best way to recover from the lingering effects of the great recession.
This caused Fed rate hike bets to slip slghtly, which are among the primary reasons for USD’s Monday weakness.
Japanese Yen (JPY) Slides as Fed Rate Hike Bets Dissuade Yen Bells
After pushing USD/JPY down to its worst levels in years multiple times in recent months, the Yen finally seems to have accepted a longer bearish period, thanks largely due to the strength of the US Dollar itself.
With the US economy floundering in recent months and low bets of further easing from the Federal Reserve, ‘safe haven’ investors would often look towards the Yen to keep assets safe over the US Dollar.
However, the Yen has lost much of its strength against the Dollar over the last two weeks as higher bets for Federal Reserve rate hike bets and overall market stability have left the US Dollar bullish.
Other factors hurting the Yen include continually bearish behaviour from Bank of Japan Governor Haruhiko Kuroda, despite hopes that the BoJ was looking to wind down its easing bias. High prices of oil have also left the Yen weaker, as Japan is an oil-importing nation.
According to Bloomberg, bullish bets on the Yen from hedge funds have begun to plunge after hitting highs earlier this year, indicating that the market is losing faith in the Yen’s value against the Dollar going forward.
US Dollar to Japanese Yen Forecast: Strong US Data Needed to Keep USD/JPY Afloat
While the primary reason for USD/JPY’s increase in demand in recent weeks has been higher Fed rate hike bets and perception of market stability after November’s US election, the US Dollar will need a steady supply of strong economic data to help support it.
This is particularly important after last week’s comments from Yellen, which indicate that the Fed is happy to keep monetary policy in extreme-easing mode unless the US economy needs to be supported by higher interest rates.
Tuesday’s session will see the publication of September’s Consumer Price Index (CPI) scores, which are expected to have improved to 1.5% year-on-year. If this score falls below expectations, Fed rate hike bets are likely to fall.
The Japanese Yen, on the other hand, could continue to weaken if Fed rate hike bets remain high. Increased volatility from a weaker Yen could also leave the Japanese currency seeing lower value as speculation of November easing from the BoJ heats up in the coming weeks.
At the time of writing, the US Dollar to Japanese Yen (USD/JPY) exchange rate trends in the region of 104.00, while the Japanese Yen to US Dollar (JPY/USD) exchange rate trades at around 0.0096.
US Dollar (USD) Maintains Strength on High Fed Rate Hike Bets
The US Dollar experienced a bullish run last week, advancing in almost every session throughout the week’s trade as bets that the Federal Reserve would hike US interest rates in December continued to rise. September’s domestic data supported USD further, seemingly improving from slumps seen in August.
Various factors have improved December’s Fed rate hike bets, including the aforementioned data as well as bets towards November’s US Presidential election.
Democrat nominee Hillary Clinton has been performing solidly in polls, giving investors hope that she will win the election and add to long-term market stability due to similarity between her economic policies and those of US President Barack Obama’s.
However, USD demand was a little more mixed on Monday as markets still readjusted to comments made by Fed Chairwoman Janet Yellen last Friday.
In a speech on the US’ economy, Yellen stated that current monetary policy was putting high pressure on the economy and helping it to stay resilient. She indicated that keeping it this way may be the best way to recover from the lingering effects of the great recession.
This caused Fed rate hike bets to slip slghtly, which are among the primary reasons for USD’s Monday weakness.
Japanese Yen (JPY) Slides as Fed Rate Hike Bets Dissuade Yen Bells
After pushing USD/JPY down to its worst levels in years multiple times in recent months, the Yen finally seems to have accepted a longer bearish period, thanks largely due to the strength of the US Dollar itself.
With the US economy floundering in recent months and low bets of further easing from the Federal Reserve, ‘safe haven’ investors would often look towards the Yen to keep assets safe over the US Dollar.
However, the Yen has lost much of its strength against the Dollar over the last two weeks as higher bets for Federal Reserve rate hike bets and overall market stability have left the US Dollar bullish.
Other factors hurting the Yen include continually bearish behaviour from Bank of Japan Governor Haruhiko Kuroda, despite hopes that the BoJ was looking to wind down its easing bias. High prices of oil have also left the Yen weaker, as Japan is an oil-importing nation.
According to Bloomberg, bullish bets on the Yen from hedge funds have begun to plunge after hitting highs earlier this year, indicating that the market is losing faith in the Yen’s value against the Dollar going forward.
US Dollar to Japanese Yen Forecast: Strong US Data Needed to Keep USD/JPY Afloat
While the primary reason for USD/JPY’s increase in demand in recent weeks has been higher Fed rate hike bets and perception of market stability after November’s US election, the US Dollar will need a steady supply of strong economic data to help support it.
This is particularly important after last week’s comments from Yellen, which indicate that the Fed is happy to keep monetary policy in extreme-easing mode unless the US economy needs to be supported by higher interest rates.
Tuesday’s session will see the publication of September’s Consumer Price Index (CPI) scores, which are expected to have improved to 1.5% year-on-year. If this score falls below expectations, Fed rate hike bets are likely to fall.
The Japanese Yen, on the other hand, could continue to weaken if Fed rate hike bets remain high. Increased volatility from a weaker Yen could also leave the Japanese currency seeing lower value as speculation of November easing from the BoJ heats up in the coming weeks.
At the time of writing, the US Dollar to Japanese Yen (USD/JPY) exchange rate trends in the region of 104.00, while the Japanese Yen to US Dollar (JPY/USD) exchange rate trades at around 0.0096.
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Source: moneytransfer.co.uk