- Japanese yen weakens despite the stronger domestic inflation prints.
- USD/JPY trades near 146.00, set to a weekly augment by about 1.20%.
- The Fed Monetary Policy Report maintains a careful tone, looking at gradual alleviation.
- GOD UED Governor claims that more interest rate increases are likely if the economy stays on the right way to the target of 2% inflation.
Japan Japan (JPY) remains under pressure to the American dollar (USD) on Friday, expanding its lost series despite the subdued green -greenery and shrugging with the arms of warmer than the expected inflation numbers that emphasize the lasting pressure of prices in Japan.
The USD/JPy pair increased by about 0.35% during the day, trading nearly 146.00 and testing a fresh three -week maximum at the time of writing. In Friday’s passing, the couple is on the right track to achieve a weekly augment of about 1.20%, based on the constant profitability of the treasury in the USA.
It is worth noting that the profitability of the US 10-year tax note increased on Friday to 4.43%, borrowing the American dollar a slight advantage over yen, despite the generally subdued tone of Greenback elsewhere.
Meanwhile, fresh American data offered a mixed signal for the American dollar. The Fedu Fedu Fedu Fedu Index was stuck to -4.0 in June, corresponding to May and lack of forecasts for a miniature improvement. This reading stagnation signals that production activity in the region is still fighting, burdened with additional demand and early signs of cooling on the labor market. It is worrying that the survey employment indicator for the first time since May 2020 has returned to negative territory, indicating the renovated contraction in factory workplaces.
Today’s report on federal monetary policy (FED) painted a convoluted image of the American economy moving with eternal inflation and economic sequence from tariffs. Officials have noticed that although inflation remains increased and the labor market has a solid, full impact of recent import duties has not yet appeared – a factor that clouds their perspectives. Decision -makers have confirmed their involvement in the approach based on data, leaving unchanged rates for now, but keeping the open door for a few rates of rates this year, if the conditions allow it.
In general, the tone of the Fed strengthens market expectations that every allevision of policy will be gradual, which helps maintain the support of profits and the US dollar relatively resistant to lower peers such as Jen.
The latest CPI data in Japan add fuel to the debate on the next movement of the Bank of Japan (BIJ). Fresh data showed that in May the national consumer price rate (CPI) increased by 3.5% y / y, soothing slightly from 3.6% of April. In particular, the basic CPI – which distinguishes unstable prices of fresh food – was 3.7%every year, exceeding market forecasts and marking its fastest pace since January 2023.
Reflecting on prospects, the Governor of the Bank of Japan Kazuo Ueda said on Friday that the central bank would continue to raise interest rates if the economy improvements maintain Japan on their way to achieving a 2% target target of inflation. He admitted that “inflation underlying the base may be in stagnation due to the slowdown of economic growth, but [is] It will probably accelerate later, because the intensification of working strength deficiencies increase medium and long -term inflation expectations. “His comments strengthen the view that although the boy remains involved in the normalization of politics, he will move carefully.
Bank of Japan Faq
Bank Japan (Bij) is a Japanese central bank that establishes monetary policy in the country. His mandate consists in issuing banknotes and transferring currency control and monetary control to ensure price stability, which means the purpose of inflation of about 2%.
In 2013, the Bank of Japan began an ultra-losed monetary policy to stimulate the economy and fuel inflation in a low inflationary environment. The bank’s policy is based on quantitative and qualitative relaxation (QQE) or printing banknotes to buy assets such as government or corporate bonds to ensure liquidity. In 2016, the bank doubled its strategy and further loosened the policy, first introducing negative interest rates, and then directly controlling the profitability of 10-year government bonds. In March 2024, the boat raised interest rates, effectively withdrawing from the ultra-losing monetary policy attitude.
The huge stimulus of the bank meant that Jen was depreciated against the main currency peers. This process tightened in 2022 and 2023 due to the growing discrepancy of politics between the Bank of Japan and other main central banks, which decided to augment interest rates to fight high inflation. The BOJ policy led to the difference between the difference with other currencies, reducing the value of Jen. This trend partly turned in 2024, when the Boj decided to abandon his ultra-folk attitude of politics.
The weaker yen and the augment in global energy prices led to an augment in Japanese inflation, which exceeded 2% of the GOP. The prospect of increasing remuneration in the country – a key element driving inflation – also contributed to the move.
