Japanese yen is under pressure as the prospects of the BoJ cutting interest rates soon fall.
The Japanese yen (JPY) struggles to build on its slight Asian session advance against the US dollar. And remains near the weekly low reached on Tuesday. Governor Kazuo Ueda of the Bank of Japan (BoJ) gave a little bleaker assessment of the economy earlier this week. Lowering expectations for an early interest rate hike. This, together with the underlying strong bullishness Sentiment in global equities markets is seen eroding the safe-haven JPY.
Minor USD increase also gives support to USDJPY, while Fed uncertainty may limit gains.
Aside from that, a slight US Dollar (USD) increase serves. As a tailwind for the USDJPY pair.
Meanwhile, the results of Japan’s spring wage discussions showed. That most enterprises agreed to the trade unions’ wage increase proposals. Laying the way for an impending shift in the BoJ’s policy stance. Aside from that, continued geopolitical concerns may limit losses in the safe-haven JPY. Furthermore, the uncertainty surrounding the Federal Reserve’s (Fed) rate-cutting path may prevent USD bulls from initiating aggressive wagers, capping the USDJPY pair. Investors may also want to remain on the sidelines ahead of next week’s important central bank event threats.
Traders may opt to remain on the sidelines ahead of the BoJ and FOMC policy meetings next week.
The BOJ is slated to announce its The policy decision will be made on Tuesday. And the conclusion of the two-day FOMC meeting will be released on Wednesday. This, in turn, will help determine the next leg of the Japanese yen pair’s directional move. Meanwhile, Thursday’s US macro data, including monthly Retail Sales. The Producer Price Index (PPI), and the customary Weekly Initial Jobless Claims, will be watched for short-term trading opportunities later in the early North American session.
Daily Market Movers: Japanese Yen under pressure from lower BoJ rate cut bets and a bullish risk tone.
Japan’s largest corporations agreed fully to the Union’s pay rise demand. Paving the path for the Bank of Japan to eliminate its negative interest rates. As early as next week. and underpinning the Japanese yen.
According to Japanese media, more BoJ policymakers are supporting the possibility of a policy shift at the forthcoming policy meeting, as big company pay increases put the 2% price stability target closer to reality.
According to persons familiar with the situation, BoJ officials believe the central bank is on the verge of raising interest rates for the first time since 2007, whether at the March or April policy meeting.
However, BoJ Governor Kazuo Ueda stated earlier this week that the central bank will attempt to leave easy policy until 2% inflation is achieved, lowering expectations of an early interest rate hike.
An Israeli attack struck a UN assistance distribution center in Rafah Meanwhile, Lebanon’s Hezbollah reported that two of its fighters were killed in the Bekaa Valley as Israel began attacks on the area for the second consecutive day.
According to Politico, senior US officials have informed their Israeli counterparts that the Biden administration will back the attack of high-value Hamas targets in and underneath Rafah.
Traders may opt to remain on the sidelines ahead of the BoJ and FOMC policy meetings next week.
The slightly higher US consumer inflation data on Tuesday fueled speculation. That the Federal Reserve will continue to its higher-for-longer narrative. Though markets are still pricing in a rate decrease in June.
This keeps the US Dollar bulls on the defensive and provides little to no real impetus to the Jspanese Yen pair as traders remain on the sidelines ahead of the The BoJ and FOMC will have monetary policy meetings next week.
Meanwhile, Thursday’s release of US macro data – Retail Sales. Producer Price Index (PPI), and Weekly Initial Jobless Claims – may provide short-term trading opportunities ahead of important central bank event risks.
