Japanese Yen adds to intraday losses against USD, intervention fears could limit the downside – Crypto News – Crypto News
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Marches firmly above 135.00, after dovish US FOMC minutes Marches firmly above 135.00, after dovish US FOMC minutes

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Japanese Yen adds to intraday losses against USD, intervention fears could limit the downside – Crypto News

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  • The Japanese Yen stalls a two-day-old recovery trend from the YTD low touched on Tuesday.
  • A positive risk tone and the uncertainty about BoJ’s policy shift undermine the safe-haven JPY.
  • Reviving bets for an early rate cut by the Fed to cap the USD and act as a headwind for USD/JPY.

The Japanese Yen (JPY) meets with a fresh supply during the Asian session on Friday and for now, seems to have stalled its recovery from the YTD low touched against the US Dollar (USD) earlier this week. The underlying bullish tone around the equity markets, along with the uncertainty about the likely timing of when the Bank of Japan (BoJ) will exit the negative interest rates policy, turn out to be key factors undermining the safe-haven JPY. 

Apart from this, reviving USD demand, bolstered by an uptick in the US Treasury bond yields, lifts the USD/JPY pair beyond the 150.00 psychological mark. That said, the weaker US Retail Sales data released on Thursday revived bets that the Federal Reserve (Fed) will soon start cutting interest rates. This, in turn, might hold back the USD bulls from placing aggressive bets and cap the currency pair amid fears of a possible intervention by Japanese authorities.

Market participants now look to the US economic docket – featuring the release of the Producer Price Index (PPI), Housing Starts and the Preliminary Michigan Consumer Sentiment Index. This, along with speeches by influential FOMC members, will drive the USD and provide a fresh impetus to the USD/JPY pair. Nevertheless, spot prices seem poised to register gains for the seventh straight week and post the highest weekly close since early November. 

Daily Digest Market Movers: Japanese Yen is pressured by BoJ uncertainty, reduced safe-haven demand

  • Reduced bets for an imminent shift in the Bank of Japan’s policy stance, along with the risk-on mood, fail to assist the safe-haven Japanese Yen to build on a two-day recovery trend from the YTD low.
  • Japan’s economy unexpectedly contracted in the fourth quarter on weak domestic demand and slipped into a recession, which might have derailed the BoJ’s plan to exit its ultra-easy policy this year.
  • Investors turned optimistic after the dismal US macro data released on Thursday pointed to possible signs of weakness in consumer spending and fuelled hopes for an early rate cut by the Federal Reserve.
  • The Commerce Department reported that Retail Sales declined sharply by 0.8% in January, more than the 0.1% fall expected, while sales excluding auto contracted by 0.6% during the reported month.
  • According to the CME Group’s FedWatch Tool, bets for a rate cut of at least 25 basis points in May edged up to 40% and the odds for such a move in June stood at roughly 80% following the data.
  • A separate report showed that import prices posted their biggest gain in nearly two years and jumped by 0.8% last month, though declined by 1.3% over the past 12 months through January.
  • Meanwhile, the number of Americans who applied for unemployment benefits slid by 8K from 220K in the prior week, to a one-month low of 212K during the week ended February 10.
  • Atlanta Fed President Bostic said on Thursday that the US central bank has made solid progress in lowering inflation and will soon contemplate cutting rates, though a strong economy argues for patience.
  • The yield on the benchmark 10-year US government bond holds above the 4.0% mark and helps the USD to stall its corrective decline from a multi-month top, providing a modest lift to the USD/JPY pair.
  • Investors now look to the US Producer Price Index (PPI), which is expected to ease to the 0.6% YoY rate from 1.0% previously, for fresh cues about the Fed’s future policy decision and rate-cut path.
  • Friday’s US economic docket also features the release of Housing Starts and the Preliminary Michigan Consumer Sentiment Index, which, along with speeches by Fed officials, should provide some impetus.
  • Japan’s Finance Minister Shunichi Suzuki reiterated on Friday that the government will closely monitor FX moves and it is important for currencies to move in a stable manner, reflecting fundamentals.

Technical Analysis: USD/JPY might confront stiff resistance ahead of 151.00, or the YTD top set on Tuesday

From a technical perspective, any subsequent move up is likely to confront some resistance near the mid-150.00s ahead of the 150.85-150.90 region, or a multi-month top set on Tuesday. Some follow-through buying beyond the 151.00 round figure will be seen as a fresh trigger for bullish traders and pave the way for a further appreciating move. Given that oscillators on the daily chart are holding in the positive territory and are still away from the overbought zone, the USD/JPY pair might then climb to the 151.45 intermediate hurdle. The momentum could extend further towards the 152.00 neighbourhood, or a multi-decade peak set in October 2022 and retested in November 2023.

On the flip side, the overnight swing low, around mid-149.00s, now seems to protect the immediate downside ahead of the 149.25-149.20 area and the 149.00 round figure. The latter should act as a key pivotal point, which if broken decisively will suggest that the USD/JPY pair has formed a near-term top and set the stage for some meaningful corrective decline. The subsequent downfall has the potential to drag spot prices to the 148.35-148.30 region en route to the 148.00 mark and the 100-day Simple Moving Average (SMA) support near the 147.70-147.65 zone.

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 New Zealand Dollar.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   0.08% 0.09% 0.10% 0.21% 0.09% 0.25% 0.08%
EUR -0.09%   -0.01% 0.01% 0.12% 0.00% 0.17% 0.00%
GBP -0.10% -0.03%   0.00% 0.11% -0.01% 0.15% -0.01%
CAD -0.10% -0.02% 0.01%   0.12% -0.01% 0.15% -0.01%
AUD -0.21% -0.11% -0.10% -0.10%   -0.11% 0.05% -0.10%
JPY -0.09% 0.00% 0.01% 0.00% 0.09%   0.17% 0.00%
NZD -0.24% -0.16% -0.15% -0.13% -0.03% -0.15%   -0.15%
CHF -0.09% 0.00% 0.03% 0.02% 0.14% 0.01% 0.17%  

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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

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 has embarked in an ultra-loose monetary policy since 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.

The Bank’s massive stimulus has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy of holding down rates has led to a widening differential with other currencies, dragging down the value of the Yen.

A weaker Yen and the spike in global energy prices have led to an increase in Japanese inflation, which has exceeded the BoJ’s 2% target. Still, the Bank judges that the sustainable and stable achievement of the 2% target has not yet come in sight, so any sudden change in the current policy looks unlikely.

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