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US Dollar to Japanese Yen Exchange Rate Tumbles Despite Dovish Bank of Japan
Published: 21 Jul at 5 PM Tags: Dollar Exchange Rate, Currency Exchange, Forex, Yen Exchange Rate, Exchange Rates, Inflation,
The US Dollar to Japanese Yen exchange rate tumbled last week, despite an unexpectedly dovish Bank of Japan (BoJ) meeting that led to a brief Yen selloff. Low Fed rate hike bets have kept the US Dollar generally unappealing against its rival.
USD/JPY began last week trading at around 112.52. At the end of the week the pair continued to tumble and at the end of the week was trending near a one-month-low of 111.10.
In the middle of the week, the Bank of Japan (BoJ) held its July monetary policy decision. The bank unexpectedly cut its Japanese inflation forecasts, which was a negative for Yen traders.
BoJ Governor Haruhiko Kuroda took a dovish tone. He defended the bank’s reputation on forecasts and indicated the bank would be willing to loosen monetary policy even further in the future if necessary.
This led to a brief Japanese Yen selloff in the middle of the week, but the US Dollar only benefitted briefly and USD/JPY still ended the week near its lowest weekly levels.
The ‘Greenback’ Dollar has plunged over the last week due to a number of factors.
Lower-than-expected US inflation results dented Federal Reserve interest rate hike bets. The CME FedWatch Tool currently shows that bets of the Fed rate staying frozen for the rest of the year are over 50%.
Market confidence in US President Donald Trump’s economic agenda has also slipped again in the past week, as the Republican healthcare bill appeared to fail to pass through US Congress.
The latest healthcare bill slip up has worsened concerns that Trump will also struggle to push through his proposals for tax reform and infrastructure investment.
The US Dollar to Japanese Yen exchange rate could be in for another week of losses depending on the outcome of the Federal Reserve’s July policy decision, which takes place on Wednesday.
Analysts don’t expect any change in monetary policy from the Fed, but any potential shift in tone in the policy statement will set the tone for US Dollar trade for the rest of the week.
If the Fed indicates that it still intends to hike US interest rates a third time before the end of 2017, the US Dollar will surge and could recover some of its recent losses against the Yen.
However, if the Fed becomes more cautious about US inflation and downplays the possibility of another 2017 rate hike, USD/JPY is likely to fall even further.
The Japanese Yen could be in for some losses next week too however. Next Friday will see the publication of Japan’s June inflation rate, unemployment rate and retail sales report.
If Japanese inflation falls short of expectations, investors may be concerned that the Bank of Japan (BoJ) will become even more dovish and lean towards further loosening monetary policy.
Overall, US Dollar to Japanese Yen exchange rate could recover next week, but that largely depends on the Federal Reserve’s tone.
USD/JPY began last week trading at around 112.52. At the end of the week the pair continued to tumble and at the end of the week was trending near a one-month-low of 111.10.
In the middle of the week, the Bank of Japan (BoJ) held its July monetary policy decision. The bank unexpectedly cut its Japanese inflation forecasts, which was a negative for Yen traders.
BoJ Governor Haruhiko Kuroda took a dovish tone. He defended the bank’s reputation on forecasts and indicated the bank would be willing to loosen monetary policy even further in the future if necessary.
This led to a brief Japanese Yen selloff in the middle of the week, but the US Dollar only benefitted briefly and USD/JPY still ended the week near its lowest weekly levels.
The ‘Greenback’ Dollar has plunged over the last week due to a number of factors.
Lower-than-expected US inflation results dented Federal Reserve interest rate hike bets. The CME FedWatch Tool currently shows that bets of the Fed rate staying frozen for the rest of the year are over 50%.
Market confidence in US President Donald Trump’s economic agenda has also slipped again in the past week, as the Republican healthcare bill appeared to fail to pass through US Congress.
The latest healthcare bill slip up has worsened concerns that Trump will also struggle to push through his proposals for tax reform and infrastructure investment.
The US Dollar to Japanese Yen exchange rate could be in for another week of losses depending on the outcome of the Federal Reserve’s July policy decision, which takes place on Wednesday.
Analysts don’t expect any change in monetary policy from the Fed, but any potential shift in tone in the policy statement will set the tone for US Dollar trade for the rest of the week.
If the Fed indicates that it still intends to hike US interest rates a third time before the end of 2017, the US Dollar will surge and could recover some of its recent losses against the Yen.
However, if the Fed becomes more cautious about US inflation and downplays the possibility of another 2017 rate hike, USD/JPY is likely to fall even further.
The Japanese Yen could be in for some losses next week too however. Next Friday will see the publication of Japan’s June inflation rate, unemployment rate and retail sales report.
If Japanese inflation falls short of expectations, investors may be concerned that the Bank of Japan (BoJ) will become even more dovish and lean towards further loosening monetary policy.
Overall, US Dollar to Japanese Yen exchange rate could recover next week, but that largely depends on the Federal Reserve’s tone.
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Source: moneytransfer.co.uk