Market Analysis – USDJPY
The USDJPY is showing a moderate bullish trend during this morning’s Asian session as the US Dollar attempts to regain yesterday’s lost territory. Yesterday, the US Dollar declined generally across the market, again receiving significant strain from under performing US investment yields. The asset saw little support as the quote currency also saw bullish movement across the market not only against the US Dollar.
Due to a lack of significant economic releases, investors are focused on fighting the pandemic in the country, Treasury Bonds and technical elements to the price movement. Currently, half of the US adult population has received at least one coronavirus vaccine, but the overall incidence continues to be high and requires additional measures. Against this background, White House Medical Expert, Dr. Anthony Fauci, expressed the opinion that the authorities will allow the continued use of a single vaccine from Johnson&Johnson, despite the risk of blood clots, but will impose certain restrictions on it.
Yesterday, Federal Reserve officials confirmed the long-term preservation of the current monetary policy, despite the economic recovery and the threat of rising inflation. So, on Friday, the Governor of the Federal Reserve System, Christopher Waller, said that the US economy is starting to grow but the growth rates are not yet satisfactory for the regulator to start raising rates. Certain analysts have altered their predictions for the short to medium term movement of the US Dollar. Commerzbank have advised they believe the recovery of the US Dollar is likely to come to a halt in the short to medium term, though they have also expressed a possible return to growth if the Federal Reserve takes a less Dovish approach, even if it doesn’t necessarily result in an increase in interest rates.
The Dollar in general is receiving continuous strain from different members of the Federal Reserve’s Monetary Policy Committee. The Central bank and committee continue to comment positively on the recovery of the economy, but at the same time reminds the public of the road ahead and that there is currently no reason to increase interest rates. For example, the US Federal Reserve Board member, Christopher Waller, advised that the regulator expects the US economy to be restored but sees no reason to start tightening monetary policy. Over the past week, a positive comment is always followed by a negative for the US Dollar from the regulator.
In Japan, investors are focused on yesterday’s release of March data on foreign trade, which was positive. The volume of exports of Japanese goods increased by 16.1% instead of the 11.6% expected, and the volume of imports to the country increased by 5.7% instead of the4.7% expected, which brought the trade surplus to 663.7M Yen. The largest growth in the export of Japanese goods was in China, while the increase in sales to other world regions, including the United States, remained very moderate. However, experts believe that this strong data is unlikely to help significantly strengthen the Japanese economy, as it is under pressure from the new wave of coronavirus.
As mentioned above, the US Dollar, over the last 24-hours, has weakened against its main competitors including the Euro, Pound, and Swiss Franc. Yesterday, the US Dollar index saw the largest loss of the month so far and the movement this morning is again declining on the US Dollar Index, with the price currently at 90.87. It is important to note that even though the US Dollar is currently increasing against the Yen, overall across the market, the Dollar is declining. When looking at the Yen Currency Index, we can also see similar movements. The movement this morning against the Yen is significant and the JPYX has lost all gains made over the previous week.