Japanese yen falls across the board in response to BoJ Governor Ueda’s dovish comments.
The Japanese yen (JPY) is under heavy selling pressure on Tuesday. After the Bank of Japan (BoJ) failed to provide any signals about exiting negative rates or ending the Yield Curve Control (YCC) policy. This, combined with a consistent performance in the equity markets. Undermines the safe-haven JPY and pushes the USDJPY pair back above the mid-147.00s heading into the European session. Any Further JPY devaluation, however, appears elusive amid hopes that another significant wage raise in Japan will boost consumer spending and demand-driven inflation. Allowing the Bank of Japan to shift away from its ultra loose policy setting in the coming month.
Bets on an anticipated adjustment in the Bank of Japan’s policy stance should restrict any further depreciation.
Aside from that, weak US Dollar (USD) price action. Combined with rising anticipation that the Federal Reserve (Fed) will begin decreasing interest rates in June. May further limit the upside for the USDJPY pair. Traders may also avoid from making aggressive bets and instead turn to the latest US consumer inflation numbers for clues regarding the Fed’s rate cutting course. This, in turn, will play a vital role in delivering some real impetus to the Greenback. And currency pair ahead of the critical BoJ monetary policy.
We will meet next week. Nonetheless, the JPY appears to have halted a five day gaining streak, reaching its highest level since early February.
Daily Market Movers: Japanese Yen continues to fall on BoJ Governor Ueda’s dovish statements.
The Japanese yen falls slightly after Japan’s Finance Minister Shunichi Suzuki stated that encouraging advances are being witnessed in the Japanese economy, but that Japan has not yet reached a point where it can avoid going back into deflation.
Furthermore, Bank of Japan Governor Kazuo Ueda stated that the central bank will attempt to exit easy policy after 2% inflation is achieved, dashing hopes for a policy shift at the upcoming March 18-19 meeting.
Ueda further stated that the emphasis is on whether a positive wage-inflation cycle is beginning to assess whether long-term, stable achievement of the pricing target is within reach.
Investors, on the other hand, appear to believe that the BoJ will still exit the negative interest rate regime following the outcome of the spring wage negotiations, which might continue to benefit the Japanese yen.
Inflation in Tokyo recovered from a 22-month low and returned to above the Bank of Japan’s 2% target in February, while an upward revision to Q4 GDP data suggested that Japan’s economy avoided a technical recession.
Data released on Tuesday revealed that the Producer Price Index in Japan grew 0.2% MoM in February, compared to a flat reading last month, and the yearly rate climbed from 0.2% to 0.6%, reaffirming forecasts for a BoJ policy. shift.
Furthermore, the ongoing annual wage negotiations are projected to result in significant pay increases for the second consecutive year. Allowing the BoJ to shift away from its ultra dovish monetary policy settings.
US dollar continues to struggle to attract major buyers.
The US dollar continues to struggle to attract major buyers in the face of growing expectations. That the Federal Reserve would begin reducing interest rates at the June FOMC policy meeting.
The yield on the benchmark 10-year US government bond fell to a five-week low on Monday. And remains near 4.0%, keeping USD bulls on the defensive and perhaps capping the USDJPY pair.
Traders may also want to stay out of the market until the US consumer inflation statistics are released.
Traders are now looking to the US consumer inflation numbers for clues. Regarding the expected date and speed of the Fed’s Rate cutting cycle before preparing. For the next leg of a directed move ahead of the Bank of Japan next week.
The headline CPI is forecast to rise to 0.4% in February. with the annual rate remaining steady at 3.1%. While the Core CPI is expected to fall to 3.7% YoY from 3.9% before.
