Japanese Yen bulls ignore stronger Tokyo CPI print, restrained USD price movement.
The Japanese Yen (JPY) struggles to benefit on the stronger Tokyo CPI-inspired slight increase, but it manages to stay above last week’s swing low against the US dollar during the Asian session on Tuesday.
The BoJ policy uncertainty is preventing JPY bulls from placing new wagers.
The ambiguity around the Bank of Japan’s (BoJ) decision to tighten monetary policy prevents JPY bulls from making aggressive wagers. However, the downside remains cushioned given anticipation that the Bank of Japan may pivot away from its ultra-loose monetary policy settings if wage talks result in significant pay increases. In addition, expectations that Japanese authorities will intervene to strengthen the home currency, as well as the cautious market tone, provide some support for the safe-haven JPY.
The US Dollar (USD), on the other hand, continues to struggle to gain substantial impetus in the wake of mounting expectations that the Federal Reserve (Fed) would begin decreasing interest rates in June. This further limits the upside for the USJPY pair.
Traders appear hesitant and prefer to wait for US macroeconomic data/event risks.
Traders, on the other hand, are hesitant and prefer to wait for signs concerning the Fed’s rate-cutting strategy. As a result, the attention remains on Federal Reserve Chair Jerome Powell’s congressional appearance on Wednesday and Thursday. This week’s significant US macro statistics, including the carefully awaited The Nonfarm Payrolls (NFP) report on Friday will have a significant impact on USD price dynamics and help define the currency pair’s near-term future.
Daily Market movers: Japanese yen fails to garner major buying amid BoJ policy uncertainty.
A jump in Tokyo CPI fuels speculation that the Bank of Japan may quit the negative interest rate regime in the coming month, giving the Japanese yen a minor boost.
According to the Statistics Bureau, consumer inflation in Japan’s capital rose to 2.5% year on year in February, up from a 22-month low of 1.6% the previous month.
Meanwhile, a core reading, which excludes both energy and fresh food, dipped to 3.1% last month from 3.3% in January, but remained higher. The Bank of Japan’s yearly 2% objective.
Sticky inflation, along with prospects for another large wage increase this year, should allow the BoJ to abandon its ultra-loose monetary policy sooner rather than later.
The au Jibun Bank Service PMI for Japan was finalized at 52.9 in February, compared to the preliminary estimate of 52.5 and the 53.1 recorded the previous month.
Yoshitaka Shindo, Japan’s economy minister, refuted a media report over the weekend that Japan is considering ending deflation as prices rise.
The US Dollar bulls remain on the defensive as expectations grow that the Federal Reserve will begin reducing interest rates at its June policy meeting.
Atlanta Fed President Raphael Bostic does not anticipate back-to-back rates.
cuts when they begin, with only two 25-basis-point rate decreases expected by the end of the year.
Bostic added that inflation is on track to return to the 2% target, but he wants to see more progress and develop confidence in disinflation before voting to lower policy rates.
Traders appear hesitant and prefer to stay on the sidelines ahead of this week’s key US macro announcements.
Traders appear hesitant and prefer to stay on the sidelines ahead of this week’s key US macro announcements, which begin with the ISM Services PMI later this Tuesday.
However, the attention remains on Fed Chair Jerome Powell’s semi-annual congressional hearing on Wednesday and Thursday, as well as the US Nonfarm Payrolls (NFP) report on Friday.
