USD/JPY bounces back after consumer sentiment results boost investor sentiment

VaselineAugust 16, 2024

0 2 minutes read

USD/JPY bounces back after consumer sentiment results boost investor sentiment

USD/JPY returned below 149.00 on Friday as risk appetite regains balance.
The US dollar sees selling pressure across the board to end the trading week.
Coming up next week: Japanese national inflation data and the start of Jackson Hole.

USD/JPY fell on Friday, dipping below 149.00 earlier in the day and testing near the 148.00 handle. The US dollar is broadly sold off as broad market sentiment recovers following an uptick in US consumer sentiment numbers.

The University of Michigan’s consumer sentiment index showed a firmer-than-expected rebound in the outlook of surveyed consumers in August, rising to 67.8 from 66.4 previously, easily beating the forecast of 66.9. Investors started to print the title and piled into riskier assets while selling the greenback, despite expectations for 5-year consumer inflation holding steady at 3% in August and a slight decline in outlook on current consumption conditions in the UoM, which fell to 60.9. from 62.7, completely reversing direction on the 63.1 forecast.

Next week will open with a subdued tone to the economic calendar, with the key trigger for the yen being Japan’s National Consumer Price Index (CPI) inflation figures, while US traders will focus on the launch of the economic symposium from Jackson Hole. later in the week.

USD/JPY price

Friday’s drop in USD/JPY bids dropped the pair back below an uptrend line of the daily candlesticks, but price action is still heading to the top as buyers take a break. USD/JPY continues to trade south of the 200-day EMA near 151.67, and a bad break in the upside pressure could lead to another short technical leg forming, while intraday offers face technical levels below the 149.00 level.

USD/JPY Daily Chart

Frequently Asked Questions about the Japanese Yen

The Japanese Yen (JPY) is one of the most traded currencies in the world. Its value is largely determined by the performance of the Japanese economy, but more specifically by Bank of Japan policy, the difference between Japanese and US bond yields, or risk sentiment among traders, among other factors.

One of the Bank of Japan’s mandates is currency control, so its moves are key for the yen. The BoJ has intervened directly in currency markets on occasion, generally to depress the yen, although it refrains from doing so because of the political concerns of its main trading partners. The BoJ’s current ultra-loose monetary policy, based on massive stimulus to the economy, has caused the yen to depreciate against its major peers. This process has been exacerbated more recently by a widening policy divergence between the Bank of Japan and other major central banks, which have opted to raise interest rates sharply to fight decades-high levels of inflation.

The BoJ’s stance of sticking to ultra-loose monetary policy has led to increased policy divergence with other central banks, particularly the US Federal Reserve. This supports a widening of the spread between US and Japanese 10-year bonds, which favors the US dollar against the Japanese yen.

The Japanese yen is often seen as a safe investment. This means that during periods of market stress, investors are more likely to put their money into the Japanese currency due to its supposed reliability and stability. The troubled times are likely to strengthen the value of the yen against other currencies considered riskier to invest in.

VaselineAugust 16, 2024

0 2 minutes read

USD/JPY price

USD/JPY Daily Chart

Frequently Asked Questions about the Japanese Yen

Vaseline

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