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US Dollar to Japanese Yen Exchange Rate Sheds 2 Yen Following Bank of Japan?s Latest Actions
Published: 15 Jan at 5 PM Tags: Dollar Exchange Rate, Currency Exchange, Canadian Dollar Exchange Rate, Yen Exchange Rate, Exchange Rates, Economy, Inflation,
Despite recent strong US inflation data, the US Dollar to Japanese Yen exchange rate has fallen since last week. Investors have been digesting the latest Bank of Japan (BoJ) news, as the bank trimmed back on its purchases of long-term Japanese government bonds.
After opening last week at the level of 113.03, USD/JPY tumbled by over two Yen and ended the week at the level of 110.99. On Monday, USD/JPY continued to fall and tested a low of 110.53 – the pair’s lowest level in four months.
The US Dollar (USD) saw some support last week, in the form of US Consumer Price Index (CPI) results from December. US inflation has been a concern of Federal Reserve officials in recent months but the results came in higher than expected in core prints.
December’s core inflation was forecast to rise from 0.1% to 0.2% in December but instead climbed to 0.3%. The yearly core inflation rate rose to 1.8%, despite being forecast to remain at 1.7%.
Stronger core US inflation boosted market expectations that the Federal Reserve could ramp up the pace of US interest rate hikes in 2018, but overall the news was unable to keep the US Dollar strong against the Japanese Yen (JPY).
Other major central banks are speculated to be taking more hawkish stances over the coming year too and the global growth outlook overall is improving.
As a result, the strength of the US Dollar has been limited, and expectations for Federal Reserve interest rate hikes have not left US Dollar trade as bullish as it had been in past years.
Demand for the Japanese Yen has been stronger since last week’s news that the Bank of Japan (BoJ) will be buying less long-dated Japanese government bonds.
The move was expected, but many investors are calling it ‘stealth tapering’ and some are even speculating that the bank could be preparing to tighten its aggressive stimulus policies over the coming year or so.
Analysts noted that the market’s movements since the BoJ announcement proved how sensitive markets have become to any signs of pullback from the bank’s massive and long-lasting stimulus programme.
Markets remained anxious and excited over the news, even amid comments from BoJ Governor Haruhiko Kuroda that the bank was still planning to leave its stimulus measures on hold for the foreseeable future.
This was partially because the bank also gave its most optimistic economic outlook of Japan regional areas in almost a decade. Kuroda noted that the economy was ‘expected to continue expanding moderately’.
Could the US Dollar to Japanese Yen exchange rate continue to decline? The trend could continue until investors are given a reason to buy the US Dollar again.
Some analysts argue the US Dollar is oversold, meaning the currency could begin a recovery rally on upcoming data. However, others believe that political uncertainties could continue to weigh on USD trade while a rising global growth outlook limits the currency’s appeal too.
US data due in the coming days is unlikely to be particularly influential. Production stats will be published on Wednesday, followed by housing data on Thursday. Michigan’s January consumer confidence report will be published on Friday.
As for the Japanese Yen, it could continue to strengthen as investors anticipate next week’s Bank of Japan (BoJ) policy decision.
If the bank maintains an optimistic tone on Japan’s economy, the Yen could see stronger demand. However, if the bank plays up on caution this could give USD/JPY a chance to recover its recent losses.
After opening last week at the level of 113.03, USD/JPY tumbled by over two Yen and ended the week at the level of 110.99. On Monday, USD/JPY continued to fall and tested a low of 110.53 – the pair’s lowest level in four months.
The US Dollar (USD) saw some support last week, in the form of US Consumer Price Index (CPI) results from December. US inflation has been a concern of Federal Reserve officials in recent months but the results came in higher than expected in core prints.
December’s core inflation was forecast to rise from 0.1% to 0.2% in December but instead climbed to 0.3%. The yearly core inflation rate rose to 1.8%, despite being forecast to remain at 1.7%.
Stronger core US inflation boosted market expectations that the Federal Reserve could ramp up the pace of US interest rate hikes in 2018, but overall the news was unable to keep the US Dollar strong against the Japanese Yen (JPY).
Other major central banks are speculated to be taking more hawkish stances over the coming year too and the global growth outlook overall is improving.
As a result, the strength of the US Dollar has been limited, and expectations for Federal Reserve interest rate hikes have not left US Dollar trade as bullish as it had been in past years.
Demand for the Japanese Yen has been stronger since last week’s news that the Bank of Japan (BoJ) will be buying less long-dated Japanese government bonds.
The move was expected, but many investors are calling it ‘stealth tapering’ and some are even speculating that the bank could be preparing to tighten its aggressive stimulus policies over the coming year or so.
Analysts noted that the market’s movements since the BoJ announcement proved how sensitive markets have become to any signs of pullback from the bank’s massive and long-lasting stimulus programme.
Markets remained anxious and excited over the news, even amid comments from BoJ Governor Haruhiko Kuroda that the bank was still planning to leave its stimulus measures on hold for the foreseeable future.
This was partially because the bank also gave its most optimistic economic outlook of Japan regional areas in almost a decade. Kuroda noted that the economy was ‘expected to continue expanding moderately’.
Could the US Dollar to Japanese Yen exchange rate continue to decline? The trend could continue until investors are given a reason to buy the US Dollar again.
Some analysts argue the US Dollar is oversold, meaning the currency could begin a recovery rally on upcoming data. However, others believe that political uncertainties could continue to weigh on USD trade while a rising global growth outlook limits the currency’s appeal too.
US data due in the coming days is unlikely to be particularly influential. Production stats will be published on Wednesday, followed by housing data on Thursday. Michigan’s January consumer confidence report will be published on Friday.
As for the Japanese Yen, it could continue to strengthen as investors anticipate next week’s Bank of Japan (BoJ) policy decision.
If the bank maintains an optimistic tone on Japan’s economy, the Yen could see stronger demand. However, if the bank plays up on caution this could give USD/JPY a chance to recover its recent losses.
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Source: moneytransfer.co.uk