As the USD/JPY pair tumbles to near 156.00 in Tuesday’s American session, investors are on edge. The Japanese Yen (JPY) is strengthening amid expectations that the Bank of Japan (BoJ) will tighten its monetary policy further in its upcoming July meeting. Economists predict a 10 basis points (bps) interest rate hike by the BoJ, driven by steady inflation above the bank’s 2% target. In June, the annual National Consumer Price Index (CPI) rose to 2.8%, with core CPI excluding volatile items accelerating to 2.2%. Despite some slower growth in certain areas, the overall inflation remains a concern for BoJ policymakers due to the weak Yen boosting exports.
On the other hand, the US Dollar (USD) is gaining appeal as a safe-haven asset amidst rising risk aversion in the market. The US Dollar Index (DXY) is on the rise, nearing 104.50. Looking ahead, investors are eagerly awaiting the release of US Q2 Gross Domestic Product (GDP) and the Personal Consumption Expenditure Price Index (PCE) data for June. These economic indicators will provide crucial insights into the Federal Reserve’s (Fed) future interest rate decisions.
Japanese Yen FAQs
- What influences the value of the Japanese Yen (JPY)?
- How does the Bank of Japan (BoJ) impact the Yen’s value?
- Why is the Japanese Yen considered a safe-haven currency?
Overall, the market sentiment is mixed with the USD/JPY pair facing downward pressure from BoJ rate-cut expectations while the US Dollar gains strength as a safe-haven asset. Investors should closely monitor upcoming US economic data releases for further guidance on market trends and potential trading opportunities.