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Will the yen hit 150 against the greenback?The Japanese yen fell to a seven-year low of 125 against the US dollar on Monday as the Bank of Japan continued easing its monetary policy further widening the gap with the US Federal Reserve’s hawkish tone. But instead of seeing it as a threat to the Japanese economy, the BOJ reiterated that a weaker yen would have positive effects on pushing Japan’s GDP higher. BOJ’s divergence from Fed The US central bank recently raised interest rates for the first time since 2018 and signalled more rate hikes in the coming months to tame rising inflation. The US consumer inflation rate skyrocketed to a four-year high of 7.9% in February, prompting the Fed to take a more hawkish stance despite the lingering COVID-19 pandemic and geopolitical uncertainties. Conversely, the BOJ continued to loosen its monetary policy, reiterating that it would maintain interest rates at ultra-low levels to support Japan’s economic recovery and as inflation stays below its 2% target. The central bank also offered to purchase an unlimited amount of government bonds from Monday through Thursday this week at 0.25%. The offer is for debts with maturities of more than five years and up to 10 years. The move is one of the BOJ’s attempts to contain rising bond yields despite US Treasury yields reaching new multi-year highs. Adding pressure to the yen The measure further weighed on the yen on Monday, with economists from ING Bank expecting upside risks to prevail beyond 125. They said "130 is well within reach in the near term unless the bond environment improves.” A depreciation in the Japanese yen would drive up the costs of imports, ultimately hurting households as it would increase the costs of imported goods and other goods for consumption. It also pushed Japan’s core inflation to a two-year high of 0.8% in March, quicker than market forecasts. Preference for a weaker currency While many economies beef up efforts to boost the value of their currencies, Japan has been aiming to devalue its currency to gain a competitive advantage in foreign trade. A weak yen will make Japan-made goods more competitive overseas and increase profits that Japanese companies make in foreign markets. It would also lift services exports and increase net income receipts from abroad when converted into yen. Back in January, the BOJ estimated that a 10% drop in the yen would boost Japan’s gross domestic product by about 1%. In the final months of 2021, Japan’s GDP rose 4.6% year over year, lower than its previous forecast for a 5.4% rise. Fitch Ratings expects Japan’s inflation at 1.8% this year on the back of higher energy prices and yen depreciation. Preventing another 1998 yen volatility As the yen continues to fall against the greenback, the markets are closely watching for a recurrence of a wild rebound that occurred in the USDJPY in 1998 at the height of the Asian financial crisis. At the time, the US dollar fell by almost 15% versus the yen from its previous peak. That slump was preceded by a three-year yen depreciation as Japanese authorities believed the yen was overvalued. Will the yen hit 150 against the greenback? The question of whether the yen will reach 150 versus the US dollar is more of a when as the Fed maintains its hawkish stance and as the BOJ is poised to keep its loose monetary policy setting in the medium term. This would further widen the gap between their policies, sending the yen lower as Japan continues to book current account deficits due to a jump in oil import prices.
by BlackBull_Markets
Will the yen hit 150 against the greenback?The Japanese yen fell to a seven-year low of 125 against the US dollar on Monday as the Bank of Japan continued easing its monetary policy further widening the gap with the US Federal Reserve’s hawkish tone. But instead of seeing it as a threat to the Japanese economy, the BOJ reiterated that a weaker yen would have positive effects on pushing Japan’s GDP higher. BOJ’s divergence from Fed The US central bank recently raised interest rates for the first time since 2018 and signalled more rate hikes in the coming months to tame rising inflation. The US consumer inflation rate skyrocketed to a four-year high of 7.9% in February, prompting the Fed to take a more hawkish stance despite the lingering COVID-19 pandemic and geopolitical uncertainties. Conversely, the BOJ continued to loosen its monetary policy, reiterating that it would maintain interest rates at ultra-low levels to support Japan’s economic recovery and as inflation stays below its 2% target. The central bank also offered to purchase an unlimited amount of government bonds from Monday through Thursday this week at 0.25%. The offer is for debts with maturities of more than five years and up to 10 years. The move is one of the BOJ’s attempts to contain rising bond yields despite US Treasury yields reaching new multi-year highs. Adding pressure to the yen The measure further weighed on the yen on Monday, with economists from ING Bank expecting upside risks to prevail beyond 125. They said "130 is well within reach in the near term unless the bond environment improves.” A depreciation in the Japanese yen would drive up the costs of imports, ultimately hurting households as it would increase the costs of imported goods and other goods for consumption. It also pushed Japan’s core inflation to a two-year high of 0.8% in March, quicker than market forecasts. Preference for a weaker currency While many economies beef up efforts to boost the value of their currencies, Japan has been aiming to devalue its currency to gain a competitive advantage in foreign trade. A weak yen will make Japan-made goods more competitive overseas and increase profits that Japanese companies make in foreign markets. It would also lift services exports and increase net income receipts from abroad when converted into yen. Back in January, the BOJ estimated that a 10% drop in the yen would boost Japan’s gross domestic product by about 1%. In the final months of 2021, Japan’s GDP rose 4.6% year over year, lower than its previous forecast for a 5.4% rise. Fitch Ratings expects Japan’s inflation at 1.8% this year on the back of higher energy prices and yen depreciation. Preventing another 1998 yen volatility As the yen continues to fall against the greenback, the markets are closely watching for a recurrence of a wild rebound that occurred in the USDJPY in 1998 at the height of the Asian financial crisis. At the time, the US dollar fell by almost 15% versus the yen from its previous peak. That slump was preceded by a three-year yen depreciation as Japanese authorities believed the yen was overvalued. Will the yen hit 150 against the greenback? The question of whether the yen will reach 150 versus the US dollar is more of a when as the Fed maintains its hawkish stance and as the BOJ is poised to keep its loose monetary policy setting in the medium term. This would further widen the gap between their policies, sending the yen lower as Japan continues to book current account deficits due to a jump in oil import prices.
ECONOMICS:USINTR
by BlackBull_Markets
USDJPY (Full Review)The dynamic strength of the greenback This strength lies in the lust to expand from the base (= the tendency towards 103xx-104xx) and further in the circumstances where technical breaks occurred or are made possible. Seller's outpost at December 2016 highs is falling apart from the Fed superiority. Buyer's are now showing that momentum can be keenly exercised in the break above 118.6x. An examination of the before and after gives an undoubted advantage to buyers. The Yen as endgame weakness Critical for an evaluation of the issues raised is the fact that the war/sanctions are causing Japan to lose much of its glory to the Panda. There is no longer any likelihood of shifting gears. Japan has not yet somehow managed to get going again in the middle game and it looks inevitable. Yen is suffering a lot not only because of BOJ isolation and need of protecting, but also because the technicals are so weak. Consider for example when we were sitting at 108xx with an ABCDE slingshot. Now it is clear...The triangle was used for centralising and manoeuvring to form a gateway. All possible movement ever since has been with an impressive degree of one-sidedness; the latest break of 118.6x is unlocking 126xx in the coming weeks/months. Let's sum it up: Buyers are still aiming for the 150 target in an ABC that appears to be a done deal once above 125.8x, whereas sellers remain extremely weak. In addition with quad witching now cleared, the 118.6x break is important unlocking a structural 'crash' and burn momentum move in Yen for this week onwards.
Long
by ridethepig
8
JP225 NIKKEI : FUNDAMENTAL + LONG FORECAST | PRICE WILL GROW.Japan’s Nikkei jumps about 4% following oil drop; Nio sees gains fizzle in Hong Kong debut Shares in Asia-Pacific jumped on Thursday, following an overnight bounce on Wall Street after oil prices fell sharply from a recent surge. International benchmark Brent crude and U.S. crude futures tumbled more than 10% overnight on Wednesday. Oil prices however recovered from some of those losses in the afternoon of Asia trading hours on Thursday, with international benchmark Brent crude futures up 4.1% to $115.70 per barrel. U.S. crude futures climbed 2.92% to $111.87 per barrel. Asia markets responded on Thursday to the overnight declines in oil prices. China, India, Japan and South Korea are all major importers of oil, according to 2020 data from the International Energy Agency. The Nikkei 225 in Japan led gains among the region’s major markets as it jumped 3.94% to close at 25,690.40 while the Topix index climbed 4.04% to 1,830.03. The Hang Seng index in Hong Kong closed 1.27% higher at 20,890.26. Shares of Chinese electric vehicle maker Nio started trading in Hong Kong on Thursday, in what is the firm’s secondary listing. The shares initially jumped but later erased most of those gains, finishing its debut day 0.82% above its issue price. Mainland Chinese stocks closed in positive territory, with the Shanghai composite gaining 1.22% to 3,296.09 while the Shenzhen component surged 2.179% to 12,370.95. South Korea’s Kospi also gained 2.21% on the day to 2,680.32, with markets returning to trade from Wednesday’s presidential election which saw conservative opposition candidate Yoon Suk-yeol emerging victorious. In India, the Nifty 50 jumped 1.47% while the BSE Sensex advanced 1.53%, as of 1:47 p.m. local time. In Australia, the S&P/ASX 200 climbed 1.1% to close at 7,130.80. Shares of major miner Rio Tinto, however, plunged 7.73%. The firm told CNBC on Thursday that it is “in the process of terminating all commercial relationships it has with any Russian business.” MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1.84%. The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 98.124 after a recent decline from around 99. The Japanese yen traded at 115.90 per dollar, weaker than levels below 115.2 seen against the greenback earlier this week. The Australian dollar was at $0.7339, still off lows below $0.726 seen earlier in the week.
OANDA:JP225USDLong
by INDEX_INSIDERS