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US Dollar to Japanese Yen Exchange Rate Volatile amid Geopolitical Uncertainty
Published: 18 Apr at 5 PM Tags: Dollar Exchange Rate, Currency Exchange, Yen Exchange Rate, UK, Exchange Rates,
The US Dollar to Japanese Yen exchange rate saw considerable falls last week as geopolitical tension in the US saw investors looking to other ‘safe haven’ assets like the Japanese Yen.
USD/JPY plunged from 111.08 to 108.62 last week and when markets opened on Monday this week USD/JPY fell to a fresh five-month-low of 1.08.16. The pair trended closer to the week’s opening levels at the time of writing.
US Dollar (USD) Limp over Rising US Political Uncertainty
Recent weeks have seen the US Dollar to Japanese Yen exchange rate fall back to levels not seen since November 2016 – right after the election of US President Donald Trump.
This has been largely due to market confidence in Trump fading. In the last month or so, Trump has failed to push through his proposed healthcare plans and he has remained quiet on his proposed tax reform ideas.
Geopolitical tensions have also risen under Trump. He has taken a firm stance against North Korea in the last week and concerns are rising that one of the nations could take military action unless tensions cool again.
This week’s US data has been relatively disappointing. Monday’s April manufacturing data from Empire unexpectedly slowed to 5.2 despite being projected to only slip from 16.4 to 15. The latest housing market index data from NAHB also came in lower than expected, at 68.
Japanese Yen (JPY) Strength Thins as Bank of Japan (BoJ) Board Loses Hawks
Despite solid demand for ‘safe haven’ currencies like the Japanese Yen (JPY) in recent weeks, it has been unable to hold its best levels against the US Dollar this week due to the latest news from the Bank of Japan (BoJ).
The last hawkish policymakers remaining on the Bank of Japan’s board, Takehiro Sato and Takahide Kiuchi, regularly dissented against the dovish BoJ Governor, Haruhiko Kuroda. Their terms are set to end on the 23rd of July.
The Japanese government has nominated banker Hitoshi Suzuki and economist Gochi Kataoka to be the replacement board members.
Notably, both are supporters of aggressively loose monetary policy. Loose monetary policy has become a cornerstone in both Japanese President Shinzo Abe’s and BoJ Governor Kuroda’s respective tenures.
USD/JPY Forecast: Continued Political Jitters Could Keep US Dollar Weak
While the US Dollar to Japanese Yen exchange rate did indeed recover slightly from its multi-month lows due to this week’s Bank of Japan (BoJ) news, the pair remains within half a Yen of these lows on Tuesday.
This means USD/JPY could fall back towards these lows in the coming days if markets become increasingly anxious about geopolitical tensions.
The Japanese Yen’s status as a ‘safe haven’ currency has seen it surge in strength in recent weeks in risk-averse markets, regardless of Japan’s domestic news.
If the situation between the US and North Korea does not improve, USD/JPY is likely to see further losses in the coming days even if Japan’s upcoming trade balance data disappoints.
US jobless claim data, due for publication on Thursday, could also weaken USD demand if it comes in below expectations.
USD/JPY plunged from 111.08 to 108.62 last week and when markets opened on Monday this week USD/JPY fell to a fresh five-month-low of 1.08.16. The pair trended closer to the week’s opening levels at the time of writing.
US Dollar (USD) Limp over Rising US Political Uncertainty
Recent weeks have seen the US Dollar to Japanese Yen exchange rate fall back to levels not seen since November 2016 – right after the election of US President Donald Trump.
This has been largely due to market confidence in Trump fading. In the last month or so, Trump has failed to push through his proposed healthcare plans and he has remained quiet on his proposed tax reform ideas.
Geopolitical tensions have also risen under Trump. He has taken a firm stance against North Korea in the last week and concerns are rising that one of the nations could take military action unless tensions cool again.
This week’s US data has been relatively disappointing. Monday’s April manufacturing data from Empire unexpectedly slowed to 5.2 despite being projected to only slip from 16.4 to 15. The latest housing market index data from NAHB also came in lower than expected, at 68.
Japanese Yen (JPY) Strength Thins as Bank of Japan (BoJ) Board Loses Hawks
Despite solid demand for ‘safe haven’ currencies like the Japanese Yen (JPY) in recent weeks, it has been unable to hold its best levels against the US Dollar this week due to the latest news from the Bank of Japan (BoJ).
The last hawkish policymakers remaining on the Bank of Japan’s board, Takehiro Sato and Takahide Kiuchi, regularly dissented against the dovish BoJ Governor, Haruhiko Kuroda. Their terms are set to end on the 23rd of July.
The Japanese government has nominated banker Hitoshi Suzuki and economist Gochi Kataoka to be the replacement board members.
Notably, both are supporters of aggressively loose monetary policy. Loose monetary policy has become a cornerstone in both Japanese President Shinzo Abe’s and BoJ Governor Kuroda’s respective tenures.
USD/JPY Forecast: Continued Political Jitters Could Keep US Dollar Weak
While the US Dollar to Japanese Yen exchange rate did indeed recover slightly from its multi-month lows due to this week’s Bank of Japan (BoJ) news, the pair remains within half a Yen of these lows on Tuesday.
This means USD/JPY could fall back towards these lows in the coming days if markets become increasingly anxious about geopolitical tensions.
The Japanese Yen’s status as a ‘safe haven’ currency has seen it surge in strength in recent weeks in risk-averse markets, regardless of Japan’s domestic news.
If the situation between the US and North Korea does not improve, USD/JPY is likely to see further losses in the coming days even if Japan’s upcoming trade balance data disappoints.
US jobless claim data, due for publication on Thursday, could also weaken USD demand if it comes in below expectations.
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Source: moneytransfer.co.uk