Japanese yen has achieved a 12-week high of 152.64, as reported on Thursday.
The Japanese yen (JPY) continues to rise against the US dollar (USD) for the fourth consecutive day, hovering near its 12-week high of 152.64 established on Thursday. The increase in the Yen is most likely due to traders unwinding carry trades ahead of the Bank of Japan’s (BoJ) policy meeting next week.
Japanese yen traders unwind carry trades ahead of the Bank of Japan’s policy meeting next week.
The Bank of Japan is anticipated to boost interest rates at the forthcoming meeting week, prompting short sellers to close their positions and strengthening the yen. Furthermore, the Bank of Japan is expected to announce steps to remove substantial monetary support by tapering bond purchases.
Japanese Finance Minister Shunichi Suzuki and top currency diplomat Masato Kanda avoided speaking on foreign exchange affairs on Wednesday, as the Japanese yen pair fell to its lowest level in more than two months, according to Reuters.
The US dollar may strengthen as recent US PMI numbers allow the Fed to maintain its restrictive policies.
The US Dollar may gain ground after recent US PMI data showing a higher expansion in private-sector activity in July, highlighting the resiliency of US GDP despite rising interest rates. This statistic gives the Federal Reserve (Fed) greater freedom in maintaining its restrictive policy stance if inflation does not show indications of slowing.
Japanese yen Investors are expected to carefully monitor the On Thursday, the US Gross Domestic Product (GDP) Annualized (Q2) data will be released, followed by the inflation statistics for Personal Consumption Expenditures (PCE) on Friday. These publications are likely to reveal new insights into the US economy.
Daily Market Movers: Japanese Yen Appreciates Due to Increased Risk Aversion.
The Nikkei 225 Index fell 2.5% to below 38,200, with Japanese shares reaching five-week lows as the collapse in technology companies accelerated. This fall followed dismal quarterly reports from US tech behemoths Tesla and Alphabet.
In June, the Japan Corporate Service Price Index (CSPI), which analyzes the pricing of services traded between corporations, climbed by 3.0% year on year, compared to a previous 2.7% increase. This is the fastest pace in more than nine years, signaling rising inflationary pressures.
The In its mid-year outlook, BlackRock Investment Institute stated that Japan’s economic recovery and increasing inflation make the equity market one of its strongest convictions. The business believes that the Bank of Japan will not raise interest rates at its meeting next week.
The S&P Global US Services PMI rose to 56.0 in July, the highest rating in 28 months, up from 55.3 in June and beyond market forecasts of 55.3. Meanwhile, the Composite PMI increased to 55.0 from 54.8, the highest value since April 2022 and suggesting continued improvement over the previous 18 months.
Jibun Bank Japan Manufacturing PMI unexpectedly dropped to 49.2 in July from 50.0 the previous month.
The Jibun Bank Japan Manufacturing PMI unexpectedly dropped to 49.2 in July from 50.0 the previous month, missing market predictions of 50.5. According to preliminary estimates, industry activity has declined for the first time since April. In contrast, the Services PMI increased to 53.9 in July from 49.4 in the previous month. This is the sixth increase in the service sector this year, and the fastest pace since April.
Toshimitsu Motegi, a prominent official in the ruling party, encouraged the Bank of Japan (BoJ) to more clearly express its goal to normalize monetary policy through gradual interest rate hikes, according to Reuters. Prime Minister Fumio Kishida also stated that adjusting the central bank’s monetary policy would help Japan’s shift to a growth-driven economy.
According to media reports, Vice President Kamala Harris has recently passed 1,976 Democratic delegates to secure. The party’s presidential nomination. Harris is now the Democratic Party’s presumptive nominee for the November presidential election.
JP Morgan anticipates no rate hikes from the Bank of Japan (BoJ) in July or any time in 2024. A July rate hike is not their base case, and they do not anticipate any increases for the rest of 2024. They believe it is too early to take a bullish attitude on the yen.
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