The supply of the Japanese Yen (JPY) increased during the Asia session last Friday, halting its recovery from this year's lows against the US Dollar (USD) earlier this week. Bullish conditions in the equity markets and uncertainty surrounding the Bank of Japan's (BoJ) negative interest rate policy have weakened the JPY as a safe-haven asset.

Increased demand for USD, driven by rising US Treasury yields, pushed the USD/JPY pair above 150.00. However, weak US Retail Sales data sparked speculation about a potential rate cut by the Federal Reserve (Fed), which could limit USD gains and keep this currency pair in check amid concerns about possible intervention by Japanese authorities.

The market is now awaiting US economic data, including the release of the Producer Price Index (PPI), New Home Sales, and the Preliminary Michigan Consumer Sentiment Index. Alongside influential speeches from FOMC members, this is expected to impact USD movement and provide fresh impetus for the USD/JPY pair. Nonetheless, spot prices seem poised to record seven consecutive weeks of gains, reaching their highest weekly close since early November.

Market Movers Summary: Japanese Yen Under Pressure from BoJ Uncertainty and Reduced Safe-Haven Demand

  1. The safe-haven Japanese Yen has struggled to recover over the past two days due to uncertainty surrounding the Bank of Japan's (BoJ) policy stance and a risk-on sentiment in the markets.
  2. Japan's economy contracted in the fourth quarter due to weak domestic demand, potentially hindering the BoJ's plans to exit its ultra-loose monetary policy.
  3. Investor optimism has risen following US data indicating a potential slowdown in consumer spending, fueling hopes for earlier interest rate cuts by the Federal Reserve.
  4. Retail sales in the US dropped sharply, exceeding expectations, while automotive sales contracted.
  5. The probability of a rate cut in May has slightly increased to 40%, and the chance of a rate cut in June has reached around 80%, according to the CME Group's FedWatch Tool.
  6. US import prices rose by 0.8% last month, marking the largest increase in nearly two years.
  7. Meanwhile, the number of US jobless claims fell to 212,000, hitting a one-month low.
  8. Atlanta Fed President Bostic indicated a possibility of rate cuts, although he noted that a strong economy requires patience.
  9. The yield on 10-year US Treasuries remains above 4.0%, helping the USD halt its corrective decline.
  10. Investors are eagerly awaiting the US Producer Price Index (PPI) data for clues on Fed policy and the path of interest rate cuts.
  11. New home sales and the Michigan Consumer Sentiment Index are also scheduled for release, along with speeches from Fed officials, providing additional impetus.
  12. Japanese Finance Minister Suzuki emphasized the importance of currency stability, in line with economic fundamentals.


Read Also: 

USDJPY Rally Today: Opportunities for Traders to Profit?

BoJ Stays Silent, Japanese Yen Buyers Fail to Appear, Shocking the Market!


Warning!

This is the news regarding "Japan Yen." This analysis is based on insights from trusted fundamental and technical sources and should not be considered as advice or recommendations. Always remember that this content aims to enrich readers' information. Be sure to conduct your own research regarding other forex information to serve as a reference for your trading.

Get updated news and articles from GIC Indonesia by checking Google News daily for the latest updates on the forex and crypto world. Also, trade at GICTrade using an ECN account to enjoy trading with low spreads starting from zero!