• Following remarks made on Wednesday by BoJ board member Seiji Adachi, the Japanese Yen strengthened.
• Adachi said that if a weaker JPY causes inflation to increase, it might be acceptable to boost rates.
• Before the announcement of the US GDP and Core PCE, the US dollar is in the lead.

As a result of remarks made on Wednesday by Bank of Japan (BoJ) board member Seiji Adachi, the Japanese Yen (JPY) recovered some of its recent losses on Thursday. Adachi stressed that to guarantee that long-term yields appropriately reflect market signals, bond purchases should be gradually tapered off. Furthermore, according to Reuters, he said that if a declining value of the Japanese yen results in higher inflation, then boosting interest rates might be justified.

Bets by traders on the Bank of Japan (BoJ) raising interest rates once more have surged. Investor focus is already shifting to Tokyo’s inflation data, which is expected to be released on Friday and is regarded as a crucial sign of developments in prices across the country.

President of the Minneapolis Fed Neel Kashkari’s hawkish comments added to worries about future rate increases and maintained the significant yield differential between the US and Japan. JPY carry trades, in which investors use low-interest Japanese Yen to purchase higher-yielding US Dollar assets, are nevertheless encouraged by this climate.

 

A bit of enhanced risk aversion ahead of the announcement of US Gross Domestic Product Annualised (Q1) data on Thursday also contributed to the strengthening of the US Dollar (USD). Market players will also probably be watching Friday’s Core Personal Consumption Expenditures (PCE) Price Index data, which are expected to provide clues about the Federal Reserve’s probable position on interest rate changes.

Daily Digest Market Movers: Japanese Yen gains ground due to hawkish remarks from BoJ’s Adachi

• Bloomberg reports that Raphael Bostic, the president of the Federal Reserve Bank of Atlanta, said on Thursday that an uneven inflation path is anticipated and that a narrowing of the inflation gap would increase confidence in the need for a rate reduction.

• The Fed Beige Book report for April through mid-May, released on Wednesday, revealed that there was a modest increase in the country’s economic activity, with varying circumstances in different sectors and regions. The report also showed that wages grew somewhat, employment expanded marginally, and prices increased slightly as consumers resisted additional price increases.

• Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, suggested a rate hike, according to Reuters. “I don’t think anyone has completely ruled out the option of increasing rates,” said Kashkari, who expressed skepticism over the disinflationary trend and only anticipated two rate reductions.

• The US Housing Price Index (MoM) for March fell below expectations on Tuesday, coming in at 0.1% as opposed to the projected 0.5% for February’s 1.2% MoM.

• An important indicator of the nation’s trend of inflation, Japan’s Weighted Median Inflation Index rose by 1.1% in April. This growth rate is lower than the 1.3% gain that was observed in March.

• The Corporate Service Price Index (CSPI) for Japan. In April, the index recorded a year-over-year reading of 2.8%, above estimates of 2.3% and indicating the quickest rate of gain since March 2015.

• Shun’ichi Suzuki, the finance minister of Japan, said on Tuesday that he is closely observing foreign exchange (FX) movements and underlined the significance of currencies moving in a steady manner that reflects fundamentals. Suzuki did not, however, address the question of whether Japan had intervened in currency rates.

Technical Analysis: USD/JPY drops to near 157.00

On Thursday, the USD/JPY pair is trading at 157.10. A symmetrical triangle on the daily chart denotes a break in the current bullish trend. The 14-day Relative Strength Index (RSI), however, continues to be above 50, indicating a bullish inclination.

The symmetrical triangle’s upper limit and the psychological level of 158.00 could be tested by the USD/JPY pair. The next aim, 160.32, would be attained if this level is broken, which would be the highest point in more than thirty years.

The nine-day Exponential Moving Average (EMA) is at 156.86, and the psychological level of 157.00 appears to be the immediate support on the downside. The USD/JPY pair might continue to fall, which would put downward pressure on it and possibly challenge the symmetrical triangle’s lower boundary.

Japanese Yen price today

The Japanese Yen’s (JPY) percentage movement against the main currencies listed today is displayed in the table below. When compared to the New Zealand Dollar, the Japanese Yen was the strongest.