Tag: USDJPY

  • USD/JPY falls toward 144.00 ahead of key US-Japan trade talks

    USD/JPY falls toward 144.00 ahead of key US-Japan trade talks


    • USD/JPY edges lower on broad-based US Dollar weakness.
    • Tariff threats reemerge ahead of upcoming talks between the United States and Japan.
    • The G7 meeting in Canada on Sunday sets the stage for USD/JPY’s next big move.

    The Japanese Yen (JPY) and the US Dollar (USD) share a complex relationship, with the interests of the two global powerhouses intertwined in the USD/JPY pair.

    With USD/JPY currently trading at a critical juncture around the 144.00 psychological level, 0.65% down on Thursday, tensions between the two nations have come into focus.

    While USD/JPY is one of the most widely traded forex pairs, Thursday’s price action appears to be driven more by underlying geopolitical sentiment than by technical factors alone.

    As the largest foreign holder of US Treasuries, Japan has opposed US President Trump’s tariff policies, which include 50% duties on steel and aluminum imports and 25% tariffs on automobiles and auto parts. High tariffs on Japan’s key exports, including steel, aluminum, and car parts, are placing pressure on the Japanese economy, contributing to rising inflation. 

    With the two nations preparing for the Group of Seven (G7) meeting in Canada, talks are expected to take place in an effort to reach some form of trade agreement.

    With the two nations preparing for the Group of Seven (G7) meeting in Canada, talks are expected to take place in an effort to reach some form of trade agreement. 

    During a testimony before the House Ways on Wednesday, US Treasury Secretary Scott Bessent stated that “There are 18 important trading partners — we are working toward deals on those — and it is highly likely that those countries that are … negotiating in good faith, we will roll the date forward.” Japan has been mentioned as one of the countries with which the US is actively negotiating. 

    Although Trump continues to express the need for other countries to make a deal with the US, Japanese Prime Minister Shigeru Ishiba remains committed to ensuring that Japan gets a fair deal. Ryosei Akazawa, the chief trade negotiator for Ishiba, is anticipated to head to North America later this week for the sixth round of talks with his counterparts.

    On Thursday, Bloomberg reported comments made by Ishiba in Tokyo at a meeting where Japanese leaders gathered to discuss the situation with the US. 

    “If there’s progress before I meet the president, that’s in and of itself good,” he stated. 

    He followed up by stating, “What’s important is to achieve an agreement that’s beneficial to both Japan and the US. We won’t compromise Japan’s interests by prioritizing a quick deal.”

    For USD/JPY, the recent weakness in the pair can be attributed to a rise in USD outflows that have favoured alternative currencies. With trade talks in focus, these negotiations could contribute to the pair’s near-term move, especially if Japan uses its holdings in US Treasuries as a negotiating tool against the US.

    Tariffs FAQs

    Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.

    Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.

    There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.

    During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.



    Source link

  • Japanese Yen sticks to disappointing domestic data-inspired losses against a recovering USD

    Japanese Yen sticks to disappointing domestic data-inspired losses against a recovering USD


    • The Japanese Yen attracts sellers for the second straight day in reaction to disappointing domestic data.
    • The optimism over the resumption of US-China trade talks further undermines demand for the safe-haven JPY.
    • The divergent BoJ-Fed expectations should limit JPY losses and cap USD/JPY ahead of the US NFP report.

    The Japanese Yen (JPY) sticks to modest intraday losses led by the disappointing release of Japan’s Household Spending data released earlier this Friday. Adding to this, the optimism over the resumption of US-China trade talks and a positive risk tone turn out to be other factors undermining demand for the safe-haven JPY. This, along with a modest US Dollar (USD) uptick, lifts the USD/JPY pair back closer to the 144.00 mark during the Asian session.

    Any meaningful JPY depreciation, however, still seems elusive in the wake of the growing acceptance that the Bank of Japan (BoJ) will continue raising interest rates. This marks a big divergence in comparison to bets that the Federal Reserve (Fed) will lower borrowing costs further this year, which should cap the USD and support the lower-yielding JPY. This warrants caution for the USD/JPY bulls ahead of the US Nonfarm Payrolls (NFP) report.

    Japanese Yen bulls remain on the sidelines in the wake of weaker data, trade optimism

    • Government data released earlier this Friday showed that Japan’s Household Spending unexpectedly fell by 0.1% from a year earlier in April as compared to the 2.1% increase recorded in the previous month. On a monthly basis, spending declined more than anticipated, by 1.8% during the reported month.
    • The monthly wage data released on Thursday showed that real wages in Japan fell for a fourth consecutive month in April as rising prices continued to outpace pay hikes. This could further undermine private consumption, which contributes to over 50% of Japan’s GDP, and trigger an economic recession.
    • The US Treasury Department, in its exchange-rate report to Congress, said on Thursday that the Bank of Japan should continue to proceed with monetary tightening. The report argued that doing so would support a healthier exchange rate and facilitate needed structural adjustments in trade flows.
    • Japan reportedly is softening its stance on the 25% US auto tariff and instead is proposing a flexible framework to reduce the rate based on how much countries contribute to the US auto industry. Japan’s chief tariff negotiator, Ryosei Akazawa, is in Washington for the fifth round of talks with US officials.
    • Meanwhile, US President Donald Trump and Chinese President Xi Jinping spoke on Thursday and agreed that officials from both sides will meet soon for more talks to resolve the ongoing trade war. Trump said that the call was focused almost entirely on trade and resulted in a very positive conclusion.
    • The US Dollar remains close to its lowest level since April 22 touched the previous day amid increasing odds of an interest rate cut by the Federal Reserve in September. Traders, however, seem reluctant to place aggressive bets around the USD/JPY pair ahead of the US Nonfarm Payrolls (NFP) report later today.

    USD/JPY needs to surpass the 100-SMA on H4 to back the case for further appreciation

    From a technical perspective, the USD/JPY pair has been oscillating in a familiar range since the beginning of this week, forming a rectangle on the daily chart. Against the backdrop of the downfall from the May monthly swing low, this might still be categorized as a bearish consolidation phase. Moreover, slightly negative oscillators on the daily chart suggest that the path of least resistance for spot prices is to the downside. Hence, any further move up is more likely to attract fresh sellers near the 144.00 round figure.

    This is followed by the weekly high, around the 144.40 region. The latter coincides with the 100-period Simple Moving Average (SMA) on the 4-hour chart, which if cleared might shift the bias in favor of bullish traders and allow the USD/JPY pair to reclaim the 145.00 psychological mark.

    On the flip side, weakness below the 143.50-143.45 area could be seen as a buying opportunity near the 143.00 round figure. Some follow-through selling, leading to a subsequent slide below the 142.75-142.70 region, could make the USD/JPY pair vulnerable to accelerate the downfall to the 142.10 region, or last week’s swing low. A convincing break below the latter could make spot prices vulnerable to the recent downward trajectory and slide further to the next relevant support near the 141.60 area en route to sub-141.00 levels.

    Japanese Yen FAQs

    The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

    One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

    Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

    The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.



    Source link

  • Japanese Yen sticks to intraday losses; downside seems limited amid hawkish BoJ expectations

    Japanese Yen sticks to intraday losses; downside seems limited amid hawkish BoJ expectations


    • The Japanese Yen attracts some intraday sellers amid a combination of negative factors.
    • Calls for the BoJ to slow tapering beyond 2026 and a positive risk tone undermine the JPY.
    • The divergent BoJ-Fed policy expectations should cap any meaningful upside for USD/JPY.

    The Japanese Yen (JPY) is looking to extend its retracement slide from a one-week low touched against a broadly recovering US Dollar (USD) during the Asian session on Tuesday. Calls for the Bank of Japan (BoJ) to either maintain or ease the pace of its bond purchase tapering beyond fiscal 2026 underscore challenges that the central bank faces in removing its massive monetary stimulus. This, along with a generally positive tone around the equity markets, undermines the safe-haven JPY, which, along with a modest USD bounce from a multi-week low, lifts the USD/JPY pair to the 143.25 area, or a fresh daily high in the last hour.

    Meanwhile, BoJ Governor Kazuo Ueda reiterated in the Japanese parliament earlier today that the central bank will continue raising interest rates if the economy and prices move in line with forecasts. This marks a big divergence in comparison to bets that the Federal Reserve (Fed) will lower borrowing costs further this year, which should cap the USD and benefit the lower-yielding JPY. Moreover, persistent geopolitical risks and trade-related uncertainties should keep a lid on the market optimism, which further backs the case for the emergence of some dip-buying around the JPY. This, in turn, warrants some caution for the USD/JPY bulls.

    Japanese Yen bulls have the upper hand amid BoJ rate hike bets

    • A former Bank of Japan board member Makoto Sakurai said this Tuesday that the central bank is expected to halt its quarterly reductions in government bond purchases starting next fiscal year. Sakurai noted that authorities are concerned that continued reductions could push yields higher, making it harder to manage the economy and government debt.
    • Minutes of a meeting between the BoJ and financial institutions held in May revealed that the central bank received a sizable number of requests to maintain or slightly slow the pace of tapering in its bond purchases from fiscal year 2026. The BoJ will conduct a review of its current taper plan at its next monetary policy meeting scheduled on June 16-17.
    • BoJ Governor Kazuo Ueda reiterated earlier today that the central bank will continue to raise interest rates if the economy and prices move in line with forecasts. Ueda, however, cautioned that it is important to make a judgment without any preset ideas as uncertainties over overseas trade policies and economic situations remain extremely high.
    • Meanwhile, the current market pricing indicates around a 70% chance that the Federal Reserve will deliver at least two 25 basis points interest rate cuts by the end of this year. Moreover, Chicago Fed President Austan Goolsbee said on Monday that the US central bank would lower short-term rates once the uncertainty surrounding tariff policies is resolved.
    • On the economic data front, the Institute for Supply Management (ISM) survey published on Monday showed that economic activity in the US manufacturing sector contracted for a third straight month in May. The ISM Manufacturing PMI receded to 48.5 from 48.7 in April and came in below analysts’ estimates of 49.5, which should cap the US Dollar.
    • Russia and Ukraine held a second round of negotiations on Monday to find a way to end the three-year war amid escalating conflict. In fact, Ukraine launched a surprise attack on Russian airbases, while Russia deployed a record-breaking 472 one-way attack drones as well as several ballistic and cruise missiles against Ukraine just before the peace talks.
    • Russia, meanwhile, rejected an unconditional ceasefire and said that it would only agree to end the war if Ukraine gave up big new chunks of territory and accepted limits on the size of its army. This keeps geopolitical risks in play, which, in turn, should further contribute to limiting any meaningful depreciation move for the safe-haven JPY.
    • Traders now look forward to the release of the US JOLTS Job Openings data, which, along with speeches by influential FOMC members, will drive the USD demand and provide some impetus to the USD/JPY pair. The focus, however, will remain glued to the US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report on Friday.

    USD/JPY remains vulnerable while below 200-hour SMA, near 147.70

    From a technical perspective, the overnight breakdown below the 143.65-143.60 horizontal support, which coincided with the 200-hour Simple Moving Average (SMA), was seen as a key trigger for the USD/JPY bears. The said area should now keep a lid on any further intraday move-up. A sustained strength beyond, however, might trigger a short-covering rally and lift spot prices to the 144.00 mark. The momentum could extend further, though it runs the risk of fizzling out near the 144.40-144.45 supply zone.

    On the flip side, weakness back below the 143.00 mark could find some support near the Asian session low, around the 142.40-142.35 region. This is followed by the 142.10 area, or last week’s swing low, below which the USD/JPY pair could resume its recent downfall from the May monthly swing high. Spot prices might then weaken to the next relevant support near the 141.60 area before eventually dropping to sub-141.00 levels.

    Bank of Japan FAQs

    The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.

    The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.

    The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.

    A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.



    Source link

  • USD/JPY falls toward 144.00 ahead of key US-Japan trade talks

    Rebounds towards 144.00 after three-day slide


    • USD/JPY snaps losing streak, rises over 0.20% amid profit-taking before weekend.
    • RSI hints at bottoming, but buyers must clear 144.00 for bullish follow-through.
    • Downside risks remain if pair fails to hold above key 143.00 support.

    The USD/JPY pair snapped three straight days of losses and climbed over 0.20% on Thursday late during the North American session. The Yen’s recent depreciation, despite falling US Treasury yields and amid the lack of a catalyst, could be attributed to traders booking profits ahead of the weekend. At the time of writing, the pair trades at 143.96 after bouncing off daily lows of 142.80.

    USD/JPY Price Forecast: Technical outlook

    USD/JPY suggests buyers overcame sellers, pushing the pair above the 143.00 figure and poised to curtail the Greenback’s fall against the Yen. Momentum suggests the pair could be bottoming out, as depicted by the Relative Strength Index (RSI).

    Nevertheless, the RSI remains bearish, though it edges towards its 50-neutral line.

    That said, buyers will need USD/JPY to clear 144.00. A breach of the latter will expose key resistance levels, led by the Kijun-sen at 144.27 and the 20-day Simple Moving Average (SMA) at 144.65. If those levels are cleared, the Senkou Span A confluence and the psychological 145.00 figure will follow.

    The USD/JPY must remain below the Kijun-sen for a bearish continuation. If achieved, the first support would be 143.00, followed by the May 21 swing low of 142.80. Once hurdled, the next stop would be the previous cycle low seen at 142.35, the May 6 daily low.

    (This story was corrected on May 22 at 21:26 GMT to say in the headline and the first paragraph that USD/JPY slid for three consecutive days, not seven)

    USD/JPY Price Chart – Daily

    Japanese Yen PRICE This week

    The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the US Dollar.

    USD EUR GBP JPY CAD AUD NZD CHF
    USD -0.86% -0.99% -0.86% -0.84% -0.15% -0.30% -0.91%
    EUR 0.86% -0.17% 0.05% 0.09% 0.83% 0.62% -0.05%
    GBP 0.99% 0.17% -0.10% 0.23% 1.00% 0.78% 0.09%
    JPY 0.86% -0.05% 0.10% 0.02% 0.84% 0.76% -0.02%
    CAD 0.84% -0.09% -0.23% -0.02% 0.79% 0.55% -0.14%
    AUD 0.15% -0.83% -1.00% -0.84% -0.79% -0.21% -0.87%
    NZD 0.30% -0.62% -0.78% -0.76% -0.55% 0.21% -0.69%
    CHF 0.91% 0.05% -0.09% 0.02% 0.14% 0.87% 0.69%

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).



    Source link

  • Japanese Yen stands firm near two-week top against USD on BoJ rate hike bets, safe-haven demand

    Japanese Yen stands firm near two-week top against USD on BoJ rate hike bets, safe-haven demand


    • The Japanese Yen attracted some dip-buyers following upbeat domestic data.
    • BoJ rate hike bets and reviving safe-haven demand also lend support to the JPY.
    • The prevalent USD selling bias further exerts downward pressure on USD/JPY.

    The Japanese Yen (JPY) retains its positive bias through the Asian session and trades near a two-week high touched against a broadly weaker US Dollar (USD) earlier this Thursday. Japan’s upbeat Machinery Orders data countered recession fears and boosted hopes for an economic recovery. This, along with the growing acceptance that the Bank of Japan (BoJ) will hike interest rates again in 2025, turns out to be a key factor that continues to act as a tailwind for the JPY.

    Meanwhile, US President Donald Trump’s proposed sweeping tax bill fueled concerns about the US government’s fiscal health. Adding to this, renewed US-China tensions weigh on investors’ sentiment and further underpin the traditional safe-haven JPY. The USD, on the other hand, remains depressed amid worries about the deteriorating US fiscal outlook and bets for further rate cuts by the Federal Reserve (Fed). This further contributes to the USD/JPY pair’s decline.

    Japanese Yen bulls retain control amid BoJ rate hike bets, weaker risk sentiment

    • Data released earlier this Thursday showed that Japan’s Core Machinery Orders – a key leading indicator of capital spending over the next six to nine months – rose 13.0% in March, defying forecasts for a 1.6% decline. This marks the highest level in nearly two decades and assists the Japanese Yen to attract dip-buyers.
    • The Bank of Japan recently showed a willingness to hike interest rates further this year amid signs of broadening inflation in Japan. Moreover, investors expect that rising wages could lead to a significant increase in consumption, which, in turn, should allow the central bank to continue on its path of policy normalization.
    • Atsushi Mimura, Japan’s Vice Finance Minister for International Affairs and top foreign exchange official, said early Thursday the US did not discuss FX levels at the finance ministers’ meeting. Mimura does not believe that there is any gap in understanding with the US and reaffirmed that forex should be determined by the market.
    • Investors remain hopeful about progress in trade negotiations between the US and Japan and the possibility of an eventual deal. Japan’s Trade Minister Ryosei Akazawa is expected to attend the upcoming third round of ministerial-level talks with US Trade Representative Jamieson Greer. Moreover, US Treasury Secretary Scott Bessent is also likely to take part in the trade negotiations.
    • US President Donald Trump’s dubbed “One Big, Beautiful Bill” is expected to come to the House floor for a vote sometime on Thursday, and if passed, will add $3 trillion to $5 trillion to the federal deficit over the next ten years. This adds to worries about a deteriorating US fiscal outlook and weighs on investors’ sentiment.
    • China accused the US of abusing export control measures and violating Geneva trade agreements after the US issued guidance warning companies not to use Huawei’s Ascend AI chips. China’s Commerce Ministry said on Wednesday that US measures on advanced chips are ‘typical of unilateral bullying and protectionism.’
    • Federal Reserve officials expressed concerns over economic and business sentiment in the wake of the uncertainty tied to the Trump administration’s trade policies. Adding to this, a weak 20-year Treasury bond sale reinforced the view that investors are shying away from US assets and kept the US Dollar depressed.
    • Trump reportedly told European leaders that Russian President Vladimir Putin isn’t ready to end the war with Ukraine, as he thinks he is winning. Meanwhile, Israel’s military continued to pound the Gaza Strip and block desperately needed food aid. This keeps geopolitical risks in play and further benefits the safe-haven JPY.
    • Thursday’s release of flash PMIs could provide a fresh insight into the global economic health. Moreover, trade developments should influence the broader risk sentiment. Adding to this, the US macro data – the usual Weekly Initial Jobless Claims and Existing Home Sales – might provide some impetus to the USD/JPY pair.

    USD/JPY consolidates near 61.8% Fibo. retracement level before the next leg down

    From a technical perspective, the USD/JPY pair’s intraday move up on Thursday falters near the 144.40 region. The said area nears a confluence support breakpoint – comprising the 50% retracement level of the April-May rally and the 200-period Simple Moving Average (SMA) on the 4-hour chart – and should act as a key pivotal point. A sustained strength beyond could trigger a short-covering move, though it is likely to attract fresh sellers near the 145.00 psychological mark. This should cap spot prices near the 145.35-145.40 region, or the 38.2% Fibo. retracement level, which, if cleared decisively, might shift the near-term bias in favor of bullish traders.

    Meanwhile, oscillators on the daily chart have just started gaining negative traction and suggest that the path of least resistance for the USD/JPY pair remains to the downside. However, the Relative Strength Index (RSI) on the 4-hour chart has moved on the verge of breaking into oversold territory, making it prudent to wait for some near-term consolidation before positioning for the next leg of a downfall. That said, acceptance below the 143.20 area, or the 61.8% Fibo. retracement level, might prompt some technical selling and drag spot prices below the 143.00 round figure, to the next relevant support near the 142.40-142.35 area en route to the 142.00 mark.

    Bank of Japan FAQs

    The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.

    The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.

    The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.

    A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.



    Source link

  • Mindful of impact of the rising food prices on underlying inflation

    Mindful of impact of the rising food prices on underlying inflation


    Bank of Japan (BoJ) Governor Kazuo Ueda said on Thursday, he is “mindful of the impact of the rising food prices on underlying inflation.”

    Additional quotes

    • Uncertainties over rice and other food prices remain high, but prices likely to settle down eventually.
    • Will closely monitor price situations closely as uncertainties over global economy remain high.

    Market reaction

    These comments fail to move the needle around the Japanese Yen (JPY) as USD/JPY trades modestly flat on the day near 143.75, as of writing.

    Bank of Japan FAQs

    The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.

    The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.

    The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.

    A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.



    Source link

  • Japanese Yen bulls remain on the sidelines ahead of the crucial FOMC policy meeting

    Japanese Yen bulls remain on the sidelines ahead of the crucial FOMC policy meeting


    • The Japanese Yen attracts some intraday sellers on Tuesday, though the downside risk remains limited.
    • Trade-related uncertainties and geopolitical risks continue to act as a tailwind for the safe-haven JPY.
    • The divergent BoJ-Fed expectations further contribute to capping USD/JPY ahead of the FOMC meeting.

    The Japanese Yen (JPY) reverses an Asian session dip against its American counterpart and looks to build on the gains registered over the past two days. The uncertainty over US President Donald Trump’s trade policies and rising geopolitical tensions keep investors on edge, which, in turn, is seen lending some support to the safe-haven JPY. Furthermore, bets that the Bank of Japan (BoJ) will hike interest rates further in 2025, despite last week’s dovish pause, turn out to be another factor underpinning the JPY.

    However, the optimism over the potential de-escalation of the US-China trade war and easing concerns about a US recession hold back the JPY bulls from placing aggressive bets. Traders also seem reluctant and opt to wait for more cues about the Federal Reserve’s (Fed) rate cut path, which will play a key role in influencing the US Dollar (USD) and provide a fresh impetus to the USD/JPY pair. Hence, the market focus will remain glued to the outcome of a two-day FOMC meeting starting this Tuesday.

    Japanese Yen traders seem non-committed amid mixed cues, ahead of the crucial FOMC meeting

    • The Bank of Japan struck a cautious tone last week by slashing its growth and inflation forecasts, forcing investors to scale back their bets for the next rate hike in June or July. The central bank, however, reiterated that it remains committed to raising rates further if the economy and prices move in line with its forecasts.
    • US President Donald Trump’s erratic trade policies overshadow the optimism led by signs of easing US-China trade tensions and keep investors on edge. In fact, Trump on Sunday announced a 100% tariff on all movies produced in foreign countries. Moreover, geopolitical risks lend support to the safe-haven Japanese Yen.
    • Russia’s defense ministry said that Ukraine launched a drone attack targeting Moscow for the second night in a row on Monday. This follows reports of fresh attempts by Ukraine to cross into Russia’s Kursk region. This comes days after Russian President Vladimir Putin declared a three-day ceasefire over May 8-10.
    • Adding to this, Israel struck targets in Yemen in response to the Iranian-backed Houthis’ ballistic missile attack that hit Israel’s main airport on Sunday. The Houthis warned on Sunday that they could strike again and would impose a comprehensive air blockade on Israel by repeatedly targeting airports.
    • Meanwhile, Trump hinted at possible trade agreements with certain countries as early as this week and also signaled that he is open to lowering massive tariffs imposed on China. Furthermore, China’s Commerce Ministry said last Friday that it was evaluating the possibility of trade talks with the US.
    • On the economic data front, the Institute for Supply Management (ISM) survey showed on Monday that the growth in the US services sector picked up in April. Adding to this, signs of a still resilient US labor market help ease concerns about a US recession and act as a tailwind for the US Dollar.
    • Traders, however, seem reluctant to place aggressive bets and opt to move to the sidelines ahead of a two-day FOMC policy meeting starting this Tuesday. Investors will look for fresh cues about the Fed’s future interest rate-cut path, which, in turn, will influence the USD and the USD/JPY pair.

    USD/JPY remains vulnerable; last week’s failure near the 200-period SMA on H4 remains in play

    From a technical perspective, the USD/JPY pair last week struggled to find acceptance above the 50% Fibonacci retracement level of the March-April downfall and faced rejection near the 200-period Simple Moving Average (SMA) on the 4-hour chart. The subsequent decline and negative oscillators on daily/hourly charts suggest that the path of least resistance for spot prices is to the downside. Hence, any attempted recovery back above the 144.00 mark might still be seen as a selling opportunity near the 144.25-144.30 supply zone. A sustained strength beyond the latter, however, could trigger a short-covering rally and allow spot prices to reclaim the 145.00 psychological mark.

    On the flip side, weakness below the Asian session low, around the 143.55-143.50 area, has the potential to drag the USD/JPY pair to the 143.30 intermediate support en route to the 143.00 mark. The next relevant support is pegged near the 142.65 region, which if broken decisively would expose the 142.00 level before the currency pair eventually drops to the 141.60-141.55 zone and the 141.00 round figure.

    Economic Indicator

    Fed Interest Rate Decision

    The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).


    Read more.

    Last release:
    Wed Mar 19, 2025 18:00

    Frequency:
    Irregular

    Actual:
    4.5%

    Consensus:
    4.5%

    Previous:
    4.5%

    Source:

    Federal Reserve



    Source link

  • Falls below 144.00 as safe haven flows favor Yen

    Falls below 144.00 as safe haven flows favor Yen


    • Yen strengthens as investors seek safety amid unconfirmed trade deal rumors between US and China.
    • USD/JPY finds support at 20-day SMA; daily close above 144.00 needed to regain bullish traction.
    • Break below 143.00 could expose 141.97 and the YTD low at 139.88.

    The USD/JPY dropped late during the North American session as investors seeking safety bought the Japanese Yen (JPY) and ditched the US Dollar (USD) amid the lack of announcements of trade deals, despite rumors that the US and China are close to beginning talks. At the time of writing, the USD/JPY trades at 143.80, down 0.80%.

    USD/JPY Price Forecast: Technical outlook

    From a technical standpoint, the USD/JPY remains biased downward, hitting a lower low for the second consecutive trading day. Yet it found support at the 20-day Simple Moving Average (SMA) of 143.43 before buyers lifted the pair above the Kijun-seen at 143.70.

    Although this could pave the way for a recovery, bulls need a daily close above 144.00 if they would like to test higher prices. Otherwise, if sellers push USD/JPY below 143.00, this clears the path to test the April 29 swing low of 141.97. If surpassed, the next stop would be the year-to-date (YTD) low of 139.88.

    USD/JPY Price Chart – Daily

    Japanese Yen PRICE Today

    The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Canadian Dollar.

    USD EUR GBP JPY CAD AUD NZD CHF
    USD 0.14% -0.24% -0.63% 0.08% -0.21% -0.29% -0.38%
    EUR -0.14% -0.11% -0.52% 0.21% -0.08% -0.16% -0.26%
    GBP 0.24% 0.11% -0.63% 0.32% 0.02% -0.06% -0.15%
    JPY 0.63% 0.52% 0.63% 0.73% 0.44% 0.44% 0.36%
    CAD -0.08% -0.21% -0.32% -0.73% -0.59% -0.38% -0.47%
    AUD 0.21% 0.08% -0.02% -0.44% 0.59% -0.08% -0.17%
    NZD 0.29% 0.16% 0.06% -0.44% 0.38% 0.08% -0.10%
    CHF 0.38% 0.26% 0.15% -0.36% 0.47% 0.17% 0.10%

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

     



    Source link

  • USDJPY Technical Analysis – Dollar shorts unwind as de-escalation gathers steam

    USDJPY Technical Analysis – Dollar shorts unwind as de-escalation gathers steam


    Fundamental
    Overview

    The USD continues to be
    supported amid the ongoing de-escalation in trade wars. This has most likely to
    do with positioning rather than fundamentals. The short dollar trade got very
    overstretched so positive news on the tariffs front is providing a pullback. In
    the medium term, the US Dollar should keep on depreciating as the path of least
    resistance for the Fed remains to cut rates.

    On the JPY side, the
    currency has been driven mainly by global events rather than domestic
    fundamentals. Alongside the Swiss Franc, it’s been the favoured safe haven in
    the currencies space amid the swings in risk sentiment. On the monetary policy
    front, the BoJ kept interest rates unchanged as expected and
    delivered a dovish message.

    This was then echoed by BoJ
    Governor Ueda which placed a great deal on trade war developments. In summary,
    the central bank is likely to go faster on rate hikes in case we get a good
    trade deal and delay rate adjustments in case the trade deal disappoints.

    USDJPY
    Technical Analysis – Daily Timeframe

    USDJPY Daily

    On the daily chart, we can
    see that USDJPY continues to pull back from the key 140.00 handle. From a risk
    management perspective, the sellers will have a better risk to reward setup
    around the major trendline to position for further
    downside, while the buyers will look for a break higher to increase the bullish
    bets into the 151.00 handle next.

    USDJPY Technical
    Analysis – 4 hour Timeframe

    USDJPY 4 hour

    On the 4 hour chart, we can
    see that we have an upward minor trendline defining the bullish momentum. If we
    get a pullback, the buyers will likely lean on the trendline to position for a
    rally into the major trendline, while the sellers will look for a break lower
    to increase the bearish bets into the 140.00 handle next.

    USDJPY Technical
    Analysis – 1 hour Timeframe

    USDJPY 1 hour

    On the 1 hour chart, there’s
    not much else we can add here as chasing the rally at these levels doesn’t look
    good. We have also the US NFP report today which could provide a pullback in
    case the data is weaker than expected. The red lines define the average daily range for today.

    Upcoming
    Catalysts

    Today, we conclude the week with the US NFP report but
    watch out for tariff related news as that’s what really matters for the market
    now.

    Later this year,
    ForexLive.com
    is evolving into
    investingLive.com, a new destination for intelligent market updates and smarter
    decision-making for investors and traders alike.



    Source link

  • USD/JPY rallies as BoJ caution and US data push pair to two-week high

    USD/JPY rallies as BoJ caution and US data push pair to two-week high


    • The USD/JPY is trading with strong gains near 146.00 as the Yen weakens sharply following the BoJ’s dovish policy guidance.
    • US jobless claims surged to 241,000 while the ISM Manufacturing PMI slipped to 48.7, reinforcing expectations for Fed rate cuts later this year.
    • Technical outlook remains bullish short-term, with the pair testing resistance near 146.64 and support seen around 145.04.

    The USD/JPY is trading with notable strength, surging to the upper end of its recent range as the Japanese Yen continues to underperform following the Bank of Japan’s latest policy meeting. The pair is up 1.76% on the day and approaches the 146.00 area, driven by renewed divergence between US and Japanese monetary policy outlooks and fresh signs of labor market softness in the US.

    The BoJ kept interest rates unchanged at 0.50% and downgraded its GDP and inflation forecasts for the current and next fiscal years, citing elevated external risks and domestic uncertainty. BoJ Governor Kazuo Ueda struck a cautious tone during his press conference, highlighting that inflation momentum may stall and that the outlook lacks the confidence needed for further rate hikes. The central bank now expects GDP growth of just 0.5% for FY2025, down from 1.1%, and also lowered its inflation forecast. Markets interpreted this stance as dovish, pushing back expectations for the next hike to late 2025 at the earliest.

    Meanwhile, the US Dollar held firm against most peers after mixed data. The ISM Manufacturing PMI fell slightly to 48.7 in April, down from 49.0, but still better than expectations of 48. Employment conditions in the manufacturing sector improved modestly, with the subindex rising to 46.5, while the Prices Paid Index climbed to 69.8, showing sustained cost pressures. Additionally, initial jobless claims rose to 241,000, above both the previous week’s print and market expectations, signaling a softening labor market. These figures added to the view that the Fed may soon need to respond with rate cuts to support growth.

    Political and trade uncertainty also added a layer of caution to market sentiment. Former Treasury Secretary Janet Yellen warned about the adverse economic impact of Trump’s new tariffs, while reports suggest the US may be seeking to re-engage with China and Japan on trade terms. The USD remains broadly supported for now, helped by rising US Treasury yields and strong tech earnings boosting equity sentiment.

    Technical Analysis

    From a technical standpoint, USD/JPY is flashing a bullish signal, currently trading around 146.00 and near the top of its daily range of 142.87 to 145.65. The MACD is giving a clear buy signal, aligning with bullish support from the 10-day EMA at 143.35 and the 10-day SMA at 142.71. The RSI sits at 52.88, indicating room for further upside, while the ADX at 34.02 reinforces the bullish trend. The Williams Percent Range at -1.46 is neutral, and the 20-day SMA at 143.70 continues to underpin the uptrend. However, the 100-day and 200-day SMAs at 151.01 and 149.83 respectively suggest longer-term resistance remains significant.

    Key support levels are found at 145.55, 145.04, and 144.65. On the upside, resistance lies at 145.67, 146.64, and 146.95. A sustained break above 146.64 could open the door toward testing the 148.00 handle in coming sessions, particularly if Friday’s nonfarm payrolls confirm further labor market weakness and intensify Fed cut bets. Until then, the short-term bias remains skewed to the upside.

    Daily Chart



    Source link

  • USD/JPY slips toward 140.50 as Fed pressure builds

    USD/JPY slips toward 140.50 as Fed pressure builds


    • USD/JPY dives to the 140.50 region amid renewed political threats to Fed independence
    • Trump’s remarks intensify fears of institutional instability, weighing further on the US Dollar
    • Momentum signals remain bearish, with next key support eyed near 139.60

    The USD/JPY pair slumped on Monday during North American trading, falling sharply toward the 140.50 mark as the broader market reacted to escalating concerns surrounding the Federal Reserve’s independence. The Greenback extended its downtrend after US President Donald Trump reiterated his displeasure with Fed Chair Jerome Powell, accusing him of politically motivated rate adjustments in late 2024. The situation has sparked intense speculation over Powell’s future and raised doubts about the Fed’s autonomy.

    Meanwhile, the US Dollar Index (DXY) trades deep in the red, testing the 98.50 zone for the first time in three years. Amid this backdrop, demand for the Japanese Yen has strengthened. Investors are seeking safer assets as global uncertainty grows and confidence in US monetary leadership deteriorates. Despite Trump’s 90-day pause on new reciprocal tariffs, the absence of a clear trade policy path continues to unsettle markets.

    On the technical front, USD/JPY is flashing a bearish signal. Price action collapsed through the prior week’s low at 141.64 and now targets the June 2023 trough near 139.60. The 140.00 level remains a pivotal psychological support zone. A clean break below this threshold could expose downside risk toward the mid-130s in the medium term. Indicators support this outlook, with MACD printing bearish divergence and the RSI slipping into oversold territory. Key resistance levels are seen near 142.20, followed by 143.40 and 144.60.

    Daily chart



    Source link

  • USD/JPY struggles amid trade tensions, pair capped below key moving averages

    USD/JPY struggles amid trade tensions, pair capped below key moving averages


    USD/JPY price analysis: Dollar struggles amid trade tensions, pair capped below key moving averages

    • USD/JPY trades around the 143 zone during Wednesday’s North American session
    • US tariffs, weaker yields, and trade risks weigh on the Dollar’s broader outlook
    • Technical resistance seen near 145.50–145.80 zone, while 142.40 offers key support

    The USD/JPY pair holds a modest upside bias during Wednesday’s North American session, hovering around the 143 handle. Despite the intraday uptick, the broader tone remains cautious as the US Dollar stays under pressure in the face of escalating trade tensions and falling Treasury yields. The Japanese Yen, typically a safe haven during geopolitical flare-ups, has struggled to capitalize fully amid crosswinds in equity markets and monetary divergence.

    On the fundamental front, market sentiment has turned fragile following US President Donald Trump’s decision to explore new tariffs on critical mineral imports. These proposed levies come atop already substantial reciprocal tariffs in the ongoing US-China trade standoff. Meanwhile, China responded with rare earth export restrictions, raising concerns about supply chain disruptions in key industries such as technology and defense. Though both sides have shown openness to resume negotiations, rhetoric from Beijing emphasized the need for mutual respect.

    While US economic data has been relatively firm—March Retail Sales rose 1.4%, slightly above expectations—investors continue to divest from the Greenback, reflecting broader anxiety around global trade and monetary policy. The US Dollar Index slipped further on the day, undermining USD/JPY’s ability to extend gains.

    Technical Analysis

    From a technical perspective, the USD/JPY pair is showing a mixed picture. The Moving Average Convergence Divergence (MACD) is flashing a sell signal, suggesting weakening momentum. Meanwhile, the Relative Strength Index (RSI) stands near 32, indicating the pair is nearing oversold territory. The 20-, 100-, and 200-day Simple Moving Averages all point to further downside, reinforcing the broader bearish outlook. The Williams Percent Range signals a potential bounce, but other indicators remain neutral.

    Key support is seen around 142.41, with further downside targets at 141.80. On the upside, resistance lies at 145.47, followed by 145.79 and 146.62. Unless bulls manage to break decisively above the confluence of moving averages, upside attempts may continue to face headwinds.



    Source link

  • Excessive volatility would negatively affect economic and financial stability

    Excessive volatility would negatively affect economic and financial stability


    Japanese Finance Minister Shunichi Kato said on Tuesday, “excessive volatility would negatively affect economic and financial stability.”

    Additional quotes

    • Planning to attend the Spring meetings of IMF, World Bank in Washington.
    • Forex rates should be determined by markets.
    • Have agreed with Bessent to closely communicate on forex.
    • Closely monitoring financial markets as they have been unstable recently.

    Market reaction

    USD/JPY was last seen trading at 143.40, up 0.22% on the day.



    Source link

  • Japanese Yen retains its positive bias amid worries about escalating US-China trade war

    Japanese Yen retains its positive bias amid worries about escalating US-China trade war


    • The Japanese Yen continues to attract safe-haven flows amid the escalating US-China trade war.
    • Hopes that Japan might strike a trade deal with the US contribute to the bid tone around the JPY.
    • The divergent BoJ-Fed policy expectations provide an additional boost to the lower-yielding JPY.

    The Japanese Yen (JPY) trims a part of strong Asian session gains, though it remains within striking distance of the highest level since late September 2024 touched against a broadly weaker US Dollar (USD) last Friday. Persistent worries about the escalating US-China trade war and its impact on the global economy turn out to be a key factor driving flows towards the safe-haven JPY. Adding to this hopes that Japan might strike a trade deal with the US offer additional support to the JPY.

    Meanwhile, signs of broadening inflation in Japan keep the door open for more interest rate hikes by the Bank of Japan (BoJ). This marks a big divergence in comparison to bets that the Federal Reserve (Fed) will lower borrowing costs at least three times by the end of this year on the back of worries about a tariffs-driven US economic slowdown. The resultant narrowing of the rate differential between Japan and the US supports prospects for a further appreciation for the lower-yielding JPY.

    Japanese Yen continues to attract safe-haven flows amid rising US-China trade tensions

    • China’s announced on Friday that it has raised tariffs on US goods to 125%, while US President Donald Trump hiked duties on Chinese imports to an unprecedented 145%. This fuel worries about the potential economic fallout from the escalating trade war between the world’s two largest economies and drive some safe-haven flows toward the Japanese Yen.
    • Investors remain optimistic about a positive outcome from US-Japan trade talks. In fact, Trump said last week that tough but fair parameters are being set for a negotiation. Adding to this, US Treasury Secretary Scott Bessent said that Japan may be a priority in tariff negotiations, fueling hopes for a possible US-Japan trade deal and further underpinning the JPY.
    • Japanese Prime Minister (PM) Shigeru Ishiba warned on Monday that “US tariffs have the potential to disrupt the world economic order.” Separately, Japan’s Finance Minister Shunichi Kato said that “the US and Japan share the view that excessive FX volatility is undesirable.” Moreover, Japan’s Economy Minister Ryosei Akazawa stated that “the FX issues will be dealt with between Finance Minister Kato and US Treasury Secretary Scott Bessent.”
    • Meanwhile, the Bank of Japan’s preliminary report released last Thursday showed that annual wholesale inflation accelerated to 4.2% in March. This is a sign of persistent cost pressures, which, along with strong wage growth, should contribute to mounting domestic inflationary pressure and allow the BoJ to continue raising interest rates this year.
    • In contrast, the latest reading of the US Consumer Price Index indicated that inflation slowed sharply in March. This comes on top of the weakening confidence in the US economy and should allow the Federal Reserve to resume its rate-cutting cycle. Moreover, market participants are now pricing in the possibility of 90 basis points of rate cuts by the end of this year.
    • The divergent BoJ-Fed policy expectations turn out to be another factor that benefits the lower-yielding JPY. The US Dollar, on the other hand, languishes near its lowest level since April 2022 touched on Friday. This, in turn, drags the USD/JPY pair back closer to a multi-month low during the Asian session on Monday and supports prospects for further losses.

    USD/JPY technical setup supports prospects for an extension of a multi-month-old downtrend

    From a technical perspective, the daily Relative Strength Index (RSI) is on the verge of breaking into the oversold territory and warrants some caution for bearish traders. Hence, it will be prudent to wait for some near-term consolidation or a modest bounce before positioning for an extension of over a three-month-old downtrend. In the meantime, the 142.00 mark, or a multi-month low touched on Friday, could offer some support to the USD/JPY pair. A convincing break below could drag spot prices towards the 141.65-141.60 intermediate support en route to the 141.00 mark. Some follow-through selling below the 140.75 zone might expose the September 2024 swing low, around the 140.30-140.25 region, before the pair eventually drops to the 140.00 psychological mark.

    On the flip side, any attempted recovery back above the 143.00 mark is likely to confront stiff resistance near the 143.50-143.55 zone. The subsequent move up could lift the USD/JPY pair to the Asian session peak, around the 144.00 round figure, which if cleared decisively might trigger a short-covering rally to the 144.45-144.50 horizontal resistance. The momentum could extend further towards reclaiming the 145.00 psychological mark en route to the 145.50 zone and the 146.00 round figure.

    Tariffs FAQs

    Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.

    Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.

    There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.

    During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.



    Source link

  • USD/JPY recovers losses to near 143.50 amid tariff worries

    USD/JPY recovers losses to near 143.50 amid tariff worries


    • USD/JPY recovers some lost ground to near 143.55 in Friday’s early Asian session. 
    • An escalating trade war and uncertainty boost the safe-haven demand, supporting the Japanese Yen. 
    • The hawkish stance of the BoJ contributes to the JPY’s upside. 

    The USD/JPY pair holds losses near 143.55 during the Asian trading hours on Friday, pressured by the weaker US Dollar (USD). The uncertainty surrounding the tariff policy and the concerns over the global economic slowdown boosts encouraged investors to safe-haven currency like the Japanese Yen (JPY). 

    US President Donald Trump said on Wednesday he would temporarily lower duties on dozens of countries but ramped up the tariff on China to 125% from 104%. The looming threat of both global and US recession, driven by aggressive trade policies and uncertainty over future measures, drags the Greenback lower. 

    Traders anticipate that the US Federal Reserve (Fed) will resume cutting interest rates in June and probably lower its policy rate by a full percentage point by the end of the year. According to the CME FedWatch tool, derivatives markets now imply a 44% possibility that the Fed will cut rates at its next meeting on May 6-7, up from 14% a week ago.

    Meanwhile, the hawkish stance from the Bank of Japan (BoJ) marks a big divergence in comparison to the prospects for multiple interest rate cuts by the Federal Reserve (Fed). This, in turn, provides some support to the JPY and acts as a headwind for the pair. 

    Japan’s Finance Minister Shunichi Kato said early Friday that foreign exchange rates should be set by markets, adding that excess FX volatility negatively impacts the Japanese economy.

    (This story was corrected at 02:05 GMT to say in the title that USD/JPY recovers losses to near 143.50 amid tariff worries, not to tumble to near 143.50.)

    Japanese Yen FAQs

    The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

    One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

    Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

    The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.



    Source link

  • Japanese Yen retains its positive bias amid worries about escalating US-China trade war

    Japanese Yen strengthens in reaction to stronger PPI print from Japan


    • The Japanese Yen attracts fresh buyers as stronger PPI reaffirms BoJ rate hike bets.
    • Hopes for a US-Japan trade deal turn out to be another factor benefiting the JPY.
    • A solid recovery in the global risk sentiment could cap gains for the safe-haven JPY.

    The Japanese Yen (JPY) regained positive traction during the Asian session on Thursday in reaction to the stronger-than-expected release of the Producer Price Index (PPI), which keeps the door open for further rate hikes by the Bank of Japan (BoJ). Adding to this, the optimism that Japan might strike a trade deal with the US turns out to be another factor underpinning the JPY. This, along with a modest US Dollar (USD) downtick, drags the USD/JPY pair back below the 147.00 round-figure in the last hour.

    Meanwhile, hawkish BoJ expectations mark a big divergence in comparison to rising bets for multiple interest rate cuts by the Federal Reserve (Fed) in 2025. This, in turn, fails to assist the USD to capitalize on the overnight bounce from the weekly low and contributes to driving flows toward the lower-yielding JPY. However, a positive turnaround in the global risk sentiment, fueled by US President Donald Trump’s announcement to pause reciprocal tariffs on most nations, might cap the safe-haven JPY.

    Japanese Yen draws support from hawkish BoJ expectations; lacks follow-through amid a turnaround in the risk sentiment

    The Bank of Japan’s preliminary report released earlier this Thursday showed that Japan’s Producer Price Index (PPI) increased by 0.4% in March and rose 4.2% compared to the same time period last year. The readings were higher than consensus estimates and could push up consumer prices, which, in turn, backs the case for further policy tightening by the BoJ and underpins the Japanese Yen.

    US President Donald Trump agreed to meet Japanese officials to initiate trade discussions after speaking to Japan’s Prime Minister Shigeru Ishiba earlier this week. US Treasury Secretary Scott Bessent’s subsequent comments, saying that Japan may be a priority in tariff negotiations, fueled hopes for a possible US-Japan trade deal and turned out to be another factor that underpins the JPY.

    The US Dollar rebounded against safe-haven currencies, including the JPY, on Wednesday after Trump declared an immediate 90-day pause on the big tariff increases for most countries. The announcement eased worries about the global economic impact of US trade policies, triggering a sharp rally in equity markets. The S&P 500 soared 9.5% and registered its biggest daily gain since 2008.

    Meanwhile, the minutes of the March 18-19 FOMC meeting revealed that officials almost unanimously agreed that the US economy was at risk of experiencing higher inflation and slower growth on the back of Trump’s trade tariffs. Policymakers, however, called for a cautious approach to interest rate cuts, forcing investors to trim their bets for more aggressive easing by the Fed.

    Traders now expect the Fed to wait until June to resume its rate-cutting cycle and are pricing in just 75 basis points of rate reductions by the year-end. The USD bulls, however, seem reluctant and opt to wait for the release of the US inflation figures – the Consumer Price Index (CPI) and the Producer Price Index (PPI) on Thursday and Friday, respectively – before positioning for further gains.

    USD/JPY seems vulnerable to sliding further; repeated failures to find acceptance above 148.00 favor bearish traders

    From a technical perspective, the USD/JPY pair has been struggling to find acceptance above the 148.00 round figure since the beginning of this week. Moreover, oscillators on the daily chart are holding in negative territory and are still away from being in the oversold zone. This, in turn, favors bearish traders and suggests that the path of least resistance for spot prices remains to the downside. Hence, a subsequent slide towards the 146.30 intermediate support, en route to the 146.00 mark, looks like a distinct possibility. Some follow-through selling would expose the next relevant support near the 145.50 region before the pair eventually drops to the 145.00 psychological mark.

    On the flip side, the 147.75 zone, followed by the 148.00 mark, could act as an immediate hurdle ahead of the 148.25-148.30 region, or the weekly high touched on Wednesday. A sustained strength beyond the latter would set the stage for an extension of the previous day’s goodish rebound from sub-144.00 levels, or the lowest since October 2024, and allow the USD/JPY pair to reclaim the 149.00 round figure. The momentum could extend further towards the 149.35-149.40 area en route to the 150.00 psychological mark.

    Economic Indicator

    Producer Price Index (YoY)

    The Producer Price Index released by the Bank of Japan is a measure of prices for goods purchased by domestic corporates in Japan. The PPI is correlated with the CPI (Consumer Price Index) and is a way to measure changes in manufacturing cost and inflation in Japan. A high reading is seen as anticipatory of a rate hike and is positive (or bullish) for the JPY, while a low reading is seen as negative (or Bearish).


    Read more.

    Last release:
    Wed Apr 09, 2025 23:50

    Frequency:
    Monthly

    Actual:
    4.2%

    Consensus:
    3.9%

    Previous:
    4%

    Source:

    Statistics Bureau of Japan



    Source link

  • Oversold weakness has not stabilized – UOB Group

    Oversold weakness has not stabilized – UOB Group


    UD Dollar (USD) has gathered downward momentum vs Japanese Yen (JPY), but it might not be able to break below 145.00. In the longer run, oversold weakness has not stabilized; there is a chance for USD to drop below 145.00 again before the risk of another rebound increases, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

    USD can drop below 145.00 again

    24-HOUR VIEW: “Yesterday, we were of the view that USD ‘is likely to trade in a range between 146.00 and 149.00.’ USD traded in a 145.95/148.12 range and closed at 146.28. While the decline in the early Asian trade today has gathered momentum, USD might not be able to break below 145.00 (there is another support level at 144.40). Resistance levels are at 146.10 and 146.65.”

    1-3 WEEKS VIEW: “When USD was at 147.50 yesterday (08 Apr), we pointed out that ‘the oversold weakness in USD has not stabilized.’ We indicated that ‘there is a chance for USD to drop below 145.00 again before the risk of another rebound increases.’ We will continue to hold the same view provided that 148.50 (‘strong resistance’ level was at 149.00 yesterday) is not breached. Looking ahead, if USD closes below 145.00, it will increase the likelihood of a drop to the significant support at 143.50.”



    Source link