- USD/JPY Slides to 147.10 as Geopolitical Risks Support JPY – Daily Market Update
- US Producer Price Index (PPI) Data in Focus Today – What to Expect
The USD/JPY pair declines to around 147.10 during early Asian trading on Tuesday as geopolitical tensions in the Middle East boost the Japanese Yen. The US Dollar weakens slightly, influenced by expectations of a rate cut by the US Federal Reserve in September. Traders are adjusting their bets on the possibility of a double-cut next month, with markets now pricing in a lower chance of a 50 basis points reduction. However, a 25 bps cut is still anticipated at the Fed’s September meeting.
Today’s focus will be on the US Producer Price Index (PPI) data for July, which could provide insights into the Fed’s future rate decisions. Expectations are for a slight easing in the PPI to 2.3% YoY and the Core PPI to 2.7% YoY. A stronger-than-expected PPI could dampen rate cut expectations and support the USD against the JPY.
In the midst of these economic factors, geopolitical risks in the Middle East are also playing a role in supporting the JPY. Reports suggest that Iran may launch an attack on Israel in retaliation for the recent assassination of a Hamas leader in Tehran. This uncertainty is driving safe-haven flows towards the Japanese Yen.
On the economic front, Japanese PPI data for July met market expectations, showing a slight increase both on a yearly and monthly basis.
Japanese Yen FAQs
The Japanese Yen (JPY) is influenced by various factors including the performance of the Japanese economy, Bank of Japan’s policy, bond yield differentials, and risk sentiment among traders.
The Bank of Japan plays a crucial role in controlling the value of the Yen through its monetary policy decisions and interventions in the currency markets.
The policy divergence between the Bank of Japan and other central banks, particularly the US Federal Reserve, impacts the USD/JPY exchange rate.
The Japanese Yen is considered a safe-haven investment, attracting investors during times of market uncertainty and strengthening against riskier currencies.