Japanese yen has struggled to build on its intraday rise to surpass a two week high.
The Japanese yen (JPY) meets with fresh supply after reaching a two week high versus the US dollar earlier this Friday and falling to a daily low during the first half of the European session. The decline could be attributable to some follow through US Dollar (USD) buying, aided by the Overnight, Federal Reserve (Fed) officials made hawkish remarks.
The risk off mentality, along with intervention fears, may limit losses for the safe-haven Japanese yen.
However, any major depreciation is elusive in light of the prevalent risk-off atmosphere, which tends to drive flows to the safe-haven JPY.
Aside from this, rumors that Japanese authorities will interfere in the markets to support the home currency should help limit the JPY’s downside. Furthermore, Bank of Japan Governor Kazuo Ueda hinted at the possibility of a rate hike if JPY movements harm inflation and wages, thereby discouraging JPY bears from placing further wagers. This, in turn, calls for caution before certifying that the USDJPY pair’s decline from a multi-decade high has ended, as traders wait to the US NFP for fresh momentum.
Daily Market Movers: Japanese Yen falls amid hawkish BOJ talks, intervention worries, and risk off.
Iran has pledged to respond for Israel’s attack on its embassy in Syria, raising the danger of additional geopolitical tensions in the Middle East and strengthening the safe-haven Japanese yen.
Bank of Japan Governor Kazuo Ueda reportedly stated on Friday that the central bank may respond with monetary policy if foreign exchange movements have a significant impact on the wage-inflation cycle.
Ueda noted that the likelihood of attaining the BoJ’s 2% inflation target is increasing, with this year’s pay raises in annual wage negotiations potentially pushing up prices.
Former top Japanese currency Tatsuo Yamazaki, a government official, warned on Thursday that if the Japanese yen breaks out of the range and falls below 152 per dollar, the authorities will most certainly interfere.
Japan’s Finance Minister Shunichi Suzuki reaffirmed that he is actively monitoring foreign exchange movements with a high level of urgency.
Japan’s Finance Minister Shunichi Suzuki reaffirmed that he is actively monitoring foreign exchange movements with a high level of urgency and will not rule out any alternatives for dealing with excessive FX volatility.
Data released earlier today revealed that Japanese household spending decreased 0.5% in February from a year ago, down for the 12th consecutive month, but better than forecasts of a 3.0% drop.
The US Department of Labor said on Thursday that the number of Americans claiming for unemployment insurance jumped to 221K in the week ending March 30, compared to 214K predicted.
This pointed to signs. of cooling in the labor market and strengthened market views that the Federal Reserve will begin cutting interest rates in June, driving the US dollar to a two-week low.
Meanwhile, Minneapolis Fed President Neel Kashkari stated that he has planned two interest rate reduction this year and that rate cuts may not be necessary if inflation continues to go sideways.
Furthermore, Richmond Fed President Thomas Barkin stated that he was willing to lower interest rates once it was obvious that inflationary advances would be sustained and applied more broadly in the economy.
The hawkish stance has kept US Treasury bond yields elevated, allowing the USD to launch a late recovery, albeit the momentum evaporated fast throughout Friday’s Asian session.
Traders are now anticipating the release of US employment statistics (NFP) for some major momentum.
Investors are now looking forward to the carefully anticipated US monthly jobs data, also known as the Nonfarm Payrolls (NFP) report, for clues regarding the Fed’s rate-cutting path and some substantial traction.
