- The Japanese Yen weakened after the BoJ summary showed that policymakers were divided on rate hike timing.
- Japan’s Prime Minister Ishiba faces a leadership vote, adding another layer of uncertainty and undermining the JPY.
- The Trump optimism continues to underpin the USD and further contributes to the USD/JPY pair’s positive move.
The Japanese Yen (JPY) extends its steady intraday descent during the Asian session on Monday and has now reversed a part of its recovery gains registered against its American counterpart over the past two days. The Bank of Japan’s (BoJ) Summary of Opinions from the October meeting showed that policymakers were divided on rate hike timing. This comes on top of the political uncertainty in Japan, which raises doubts about the BoJ’s ability to tighten its monetary policy further and undermines the JPY.
Apart from this, a positive risk tone is seen denting demand for the safe-haven JPY, which, along with a bullish sentiment surrounding the US Dollar (USD), lifts the USD/JPY pair back above mid-153.00s in the last hour. That said, the recent verbal intervention by Japanese authorities might hold back the JPY bears from placing aggressive bets. Investors might prefer to move to the sidelines ahead of this week’s release of the US consumer inflation figures and Fed Chair Jerome Powell’s scheduled speech.
Japanese Yen remains depressed amid expectations that political landscape in Japan could restrict BoJ from hiking rates
- The Summary of Opinions from the Bank of Japan’s October 30-31 meeting revealed that members discussed the potential impact of changes in the US economy and policies as the central bank moves toward further interest rate increases.
- Japan’s Prime Minister Ishiba faces a leadership vote in parliament today after the ruling Liberal Democratic Party (LDP) lost its lower house majority held since 2012 and might now be looking to form a government with the support of minor parties.
- Meanwhile, the prospect of a fragile minority government in Japan raises doubts about the BoJ’s ability to hike interest rates further, which, along with the upbeat market mood, undermines the safe-haven Japanese Yen at the start of a new week.
- The US Dollar is seen consolidating its recent strong gains and remains well within the striking distance of a four-month high touched in the euphoric market reaction to Donald Trump’s victory in the US presidential election last Wednesday.
- Investors now seem convinced that US President-elect Donald Trump’s expansionary policies would boost inflation and restrict the Federal Reserve’s (Fed) ability to ease policy aggressively, which continues to underpin the Greenback.
- Minneapolis Fed President Neel Kashkari said over the weekend that the central bank wants to have confidence and needs to see more evidence that inflation will return to the 2% target before deciding on interest rate cuts going forward.
- Investors now look to this week’s release of the US consumer inflation figures on Wednesday and the US Producer Price Index (PPI) on Thursday, which will be followed by the prelim Q3 GDP print from Japan and US Retail Sales figures on Friday.
- Apart from this, speeches by influential FOMC members, including Fed Chair Jerome Powell on Friday, will play a key role in influencing the USD price dynamics and determining the next leg of a directional move for the currency pair.
Technical Outlook: USD/JPY seems poised to appreciate further towards the 154.00 mark en route to the multi-month top
The USD/JPY pair, so far, has managed to hold above the very important 200-day Simple Moving Average (SMA) resistance breakpoint, which should act as a key pivotal point. This, along with positive oscillators on the daily chart, suggests that the path of least resistance for spot prices is to the upside. Any further move-up, however, is likely to confront some resistance ahead of the mid-153.00s. A sustained strength beyond could be seen as a fresh trigger for bulls and pave the way for a move towards reclaiming the 154.00 mark en route to the 154.70 area, or the multi-month top touched last week.
On the flip side, the Asian session low, around the 152.60 area, now seems to protect the immediate downside. Some follow-through selling could drag the USD/JPY pair below the 152.00 round figure, towards the 151.70 region (200-day SMA). A convincing break below the latter will suggest that the recent strong move up from the September low has run out of steam and shift the near-term bias in favor of bearish traders.
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 | 0.06% | 0.11% | 0.58% | 0.16% | -0.14% | -0.20% | 0.14% | |
| EUR | -0.06% | 0.02% | 0.63% | 0.21% | -0.10% | -0.16% | 0.16% | |
| GBP | -0.11% | -0.02% | 0.50% | 0.19% | -0.12% | -0.18% | 0.14% | |
| JPY | -0.58% | -0.63% | -0.50% | -0.42% | -0.81% | -0.69% | -0.45% | |
| CAD | -0.16% | -0.21% | -0.19% | 0.42% | -0.25% | -0.37% | -0.05% | |
| AUD | 0.14% | 0.10% | 0.12% | 0.81% | 0.25% | -0.08% | 0.26% | |
| NZD | 0.20% | 0.16% | 0.18% | 0.69% | 0.37% | 0.08% | 0.32% | |
| CHF | -0.14% | -0.16% | -0.14% | 0.45% | 0.05% | -0.26% | -0.32% |
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).
Read the full article here