Yen Under Pressure: Preparations for a new bullish offensive?
During the Asian session, most regional currencies moved imperceptibly, while the U.S. dollar has remained stable as it awaits its inflation data that will determine the Fed's possible direction for rate cuts. As a result, Pacific currencies have moved in a flat to lower range causing the Australian dollar to remain at a two-month high, the rupee at a six-month high, the Singapore dollar and the Chinese yuan to move just 0.1% higher. The Japanese yen was the worst performer, retreating sharply from February's highs and falling just short of the November 2023 and October 2022 highs at ¥151.939, its rise was halted at ¥150.898, after dovish comments from senior Bank of Japan officials cooled bets of an imminent rate hike by the Japanese central bank.
The Yen has corrected that bullishness as BoJ Governor Kazuo Ueda has downgraded optimism about the island's economy. This has led to a 0.3% decline against the dollar during the Asian session, moving away from the highs reached on Monday. The change in direction comes against a backdrop in which Ueda had stated that the economy was in the process of recovery, but suffers from a consumption problem, and the tone on the sushi country's economy has been less optimistic than markets had expected. These statements come just days before the central bank's important meeting is due to signal or even end the regime of yield curve control and negative interest rates. In the previous sessions, better-than-expected producer inflation data and an upward revision to GDP in the fourth quarter of the previous year have reinforced the idea of a resilient Japanese market, which could provide scope for monetary policy tightening. Expectations of a possible change in the Bank of Japan's monetary policy intensify ahead of an upcoming meeting, especially after encouraging economic data suggesting a possible tightening of monetary policies.
Ion Jauregui - AT Analyst
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Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
The Yen has corrected that bullishness as BoJ Governor Kazuo Ueda has downgraded optimism about the island's economy. This has led to a 0.3% decline against the dollar during the Asian session, moving away from the highs reached on Monday. The change in direction comes against a backdrop in which Ueda had stated that the economy was in the process of recovery, but suffers from a consumption problem, and the tone on the sushi country's economy has been less optimistic than markets had expected. These statements come just days before the central bank's important meeting is due to signal or even end the regime of yield curve control and negative interest rates. In the previous sessions, better-than-expected producer inflation data and an upward revision to GDP in the fourth quarter of the previous year have reinforced the idea of a resilient Japanese market, which could provide scope for monetary policy tightening. Expectations of a possible change in the Bank of Japan's monetary policy intensify ahead of an upcoming meeting, especially after encouraging economic data suggesting a possible tightening of monetary policies.
Ion Jauregui - AT Analyst
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
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