Japanese yen strengthens further against the US dollar, raising concerns among bears. 100-day SMA pivotal support.
The Japanese yen (JPY) ticked higher during the Asian session on Wednesday. Appearing to have halted the overnight retracement decline from a one-week high, albeit with little follow-through buying. The Bank of Japan (BoJ) Governor Kazuo Ueda’s remarks during the post meeting press conference showed. That circumstances for phasing out massive stimulus and pulling short-term interest rates out of negative Territories were falling into place. This, combined with the potential of further escalation of geopolitical tensions in the Middle East. And an uncertain global economic outlook, appear to be significant reasons supporting the safe-haven JPY.
Meanwhile, the Bank of Japan dropped its core consumer price projection for fiscal 2024 to 2.4% from 2.8% in October. Dampening expectations that the ultra loose policy would need to be tightened quickly. This, in turn, is preventing JPY bulls from placing aggressive bets. Which, together with the underlying positive sentiment toward the US Dollar (USD), could help limit the USDJPY pair’s fall.
Traders also appear hesitant, preferring to wait for the release of this week’s major US macro data.
Traders may also avoid positioning for a hard near term direction. Preferring to wait for top-tier US macro data. – The Advance Q4 GDP print and the Core PCE Price Index are planned for the later part of the week.
Daily Market Movers: Japanese Yen attracts investors amid expectations on an imminent shift in the Bank of Japan’s monetary position
The Bank of Japan announced on Tuesday. That the possibility of meeting the 2% inflation target was gradually growing. Setting the framework for monetary policy normalization.
The president of Japan’s largest business lobby, Keidanren, has called for salary increases that exceed inflation this year, clearing the path for the Bank of Japan to shift away from its ultra-easy policies.
The global economic outlook remains uncertain, particularly in China and Europe, which, along with geopolitical tensions, is expected to provide some support to the safe-haven Japanese yen.
Data released Japan’s exports increased 9.8% over the previous year, with shipments to China growing for the first time in 13 months and exports to the United States reaching a record high.
The au Jibun Bank flash Japan Manufacturing PMI rose marginally to 48.0 in January from 47.9 in December, but remained in contraction zone for the eighth consecutive month.
Meanwhile, the au Jibun Bank flash Services PMI increased from 51.5 to 52.7 in January, while the Composite PMI increased to 51.1 from 50.0 in December.
US military authorities bombed three locations used by Iranian-affiliated extremist organizations in western Iraq in response to a series of escalating attacks against US soldiers in the Middle East.
Reduced bets on an early Fed rate drop benefit USD bulls and boost USDJPY.
The US dollar stays firm near a six-week high reached on Tuesday. With predictions that the Federal Reserve will not be in a hurry to decrease interest rates in the wake of a strong US economy.
Traders are now anticipating the publication of flash PMI prints from the Eurozone and the United States. Which will provide new insight into the global economic health and drive demand for the JPY.
The spotlight will, however, remain on the Advance US Q4 GDP print. And the US Core PCE Price Index the Fed’s preferred inflation gauge. Which are due on Thursday and Friday, respectively.
