Japanese yen is struggling to build on the previous day’s strong recovery from a multi decade low.
The Japanese yen (JPY) recovered strongly intraday on Monday. Rallying more than 550 pips versus the US dollar, after falling below the crucial barrier of 160.00 for the first time since April 1990. Traders cited Japanese authorities’ Intervention for the first time in 18 months. As a catalyst for the JPY’s strong return Notwithstanding relatively limited liquidity owing to a local public holiday. This, combined with the development of new US Dollar (USD) selling, pulled the USDJPY pair to a one-week low.
The conflicting BoJ-Fed policy expectations, along with a favorable risk tone, undercut the safe-haven JPY.
However, the JPY began to lose traction as a result of assumptions. That interest rates in Japan would remain low for some time. As opposed to relatively high interest rates in the United States. This, combined with a generally favorable risk tone. Which tends to undercut the safe-haven JPY, helped the Japanese yen pair attract new buyers near the mid-154.00s. Allowing it to recoup some of its hefty intraday losses. The momentum continues into the Asian session on Tuesday, propelled by pretty poor Japanese economic data.
The advent of modest USD purchasing boosts the USDJPY pair on Tuesday.
Meanwhile, the focus remains on the result of the key two-day FOMC policy meeting. Which is slated to announced on Wednesday. Furthermore, this week’s key US macroeconomic announcements, especially the much watched Nonfarm Payrolls (NFP) on Friday, will have an impact on the USD and provide significant impetus to the USDJPY pair. Meanwhile, Tuesday’s US economic calendar. Which includes the Chicago PMI and the Conference Board’s Consumer Confidence Index, will be being watched for short term trade opportunities.
Daily Market Movers: Japanese Yen meets with fresh supply amid the Bank of Japan’s uncertain rate outlook.
The Japanese yen had a spectacular intraday recovery after reaching a new 34-year low on Monday. Amid rumors that Japanese authorities interfered in the market to boost the native currency.
Masato Kanda, Japan’s senior currency ambassador, declined to disclose whether there was an intervention. But stated that the current Currency market developments were “speculative, rapid, and abnormal”.
However, the robust JPY rebound stalled as expectations rose. That a considerable interest-rate disparity between Japan and the United States would persist for some time.
At last Friday’s end-of-April policy meeting, the Bank of Japan chose to maintain its benchmark interest rate steady and stated that it will continue to buy government bonds in accordance with March guidance.
Bank of Japan dropped its economic growth prediction for the current fiscal year 2024.
The Bank of Japan dropped its economic growth prediction for the current fiscal year 2024, while statistics released on Monday indicated that inflation in Tokyo fell for the second month in April, casting doubt on further policy tightening.
The Federal Reserve is projected to maintain raising rates. for a longer period of time, and the bets were reinforced by Friday’s release of the Personal Consumption Expenditures (PCE) Price Index, which indicated sticky inflation.
According to data issued by Japan on Tuesday, the unemployment rate remained stable at 2.6% in March, compared to the expected 2.5%, while industrial production increased by 3.8%.
Meanwhile, Japan’s retail sales fell by 1.2% in March, and the yearly rate, albeit a slower-than-expected gain, indicated expansion for the 25th consecutive month, having minimal impact on the JPY.
Traders are now looking to the US economic calendar, which includes the Chicago PMI and the Conference Board’s Consumer Confidence Index, for short-term possibilities ahead of the FOMC policy decision on Wednesday.
Aside from that, crucial US macroeconomic data Scheduled at the start of a new month, affecting monthly job statistics, should influence USD price dynamics and provide a new push to the Japanese yen pair.
