Japanese yen depreciates on Tokyo CPI inflation, US PCE price index

VaselineSeptember 27, 2024

0 4 minutes read

Japanese yen depreciates on Tokyo CPI inflation, US PCE price index

The Japanese yen is losing ground after the release of CPI inflation data in Tokyo on Friday.
Tokyo’s consumer price index rose 2.2 percent from a year earlier in September, down from a 2.6 percent rise in August.
US dollar receives downward pressure from dovish Fedspeak.

The Japanese Yen (JPY) extended its decline for a third straight session after Tokyo Consumer Price Index (CPI) data released on Friday. JPY faces challenges as traders expect the BoJ to deliberate ahead of further rate hikes.

Tokyo’s consumer price index (CPI) rose 2.2 percent year-on-year in September, down from a 2.6 percent increase in August. Meanwhile, the CPI excluding fresh food and energy rose 1.6 percent from a year earlier in September, unchanged from the previous reading. CPI excluding fresh food rose 2.0% in line with expectations, compared with a previous increase of 2.4%.

The US dollar could face pressure following dovish remarks from Federal Reserve officials. Traders are now expected to closely monitor US personal consumer spending (PCE) price index data for August, the Fed’s preferred inflation gauge, on Friday for a fresh boost, which is scheduled to be released later in the American session north.

Daily Digest Market Movers: Japanese yen extends losses amid doubts about BoJ policy outlook

According to Reuters, Fed Governor Lisa Cook said on Thursday she supported last week’s 50 basis point (bps) interest rate cut, citing increased “downside risks” to employment.
Annualized US Gross Domestic Product rose at a 3.0% rate in the second quarter, as previously estimated, according to the US Bureau of Economic Analysis (BEA). Meanwhile, the GDP price index rose 2.5 percent in the second quarter.
US initial jobless claims for the week ended September 20 were reported at 218K, according to the US Department of Labor (DoL). This figure was below the initial consensus of 225K and was lower than the previous week’s revised number of 222K (previously reported as 219K).
On Thursday, the minutes of the BoJ’s monetary policy meeting expressed consensus among members on the importance of remaining vigilant on the risks of overshooting inflation targets. Several members indicated that raising rates to 0.25% would be appropriate as a way of adjusting the level of monetary support. A few others suggested that a moderate adjustment of monetary support would also be appropriate.
Federal Reserve Governor Adriana Kugler said Wednesday that she “strongly supported” the Fed’s decision to cut interest rates by half a point last week. Kugler also said further rate cuts would be appropriate if inflation continues to fall as expected, according to Bloomberg.
The US consumer confidence index fell to 98.7 in September from a revised 105.6 in August. This figure marked the biggest drop since August 2021.
On Tuesday, BoJ Governor Kazuo Ueda indicated the central bank has time to assess market and economic conditions before making any policy adjustments, signaling there is no urgency to raise interest rates again. Ueda also noted that Japan’s real interest rate remains deeply negative, which is helping to stimulate the economy and boost prices.

Technical analysis: USD/JPY holds above 145.00, nine-day EMA

USD/JPY is trading around 145.10 on Friday. Analysis of the daily chart shows that the pair is moving upwards in an ascending channel, indicating an upward bias. Furthermore, the 14-day Relative Strength Index (RSI) remains slightly above the 50 level, confirming the emergence of bullish sentiment.

On the other hand, the continued uptrend could lead USD/JPY to explore the region around the upper boundary of the ascending channel at 146.90, followed by its five-week high of 147.21, which was recorded on September 3.

In terms of support, USD/JPY may test the nine-day exponential moving average (EMA) at 143.89, aligned with the lower boundary of the ascending channel.

USD/JPY: Daily chart

Japanese Yen PRICE Today

The table below shows the percentage change of the Japanese Yen (JPY) against the major listed currencies today. The Japanese yen was the weakest against the US dollar.

	USD	EURO	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.06%	0.15%	0.13%	0.17%	0.28%	0.33%	0.02%
EURO	-0.06%		0.08%	0.05%	0.07%	0.22%	0.25%	-0.02%
GBP	-0.15%	-0.08%		0.00%	0.00%	0.14%	0.19%	-0.10%
JPY	-0.13%	-0.05%	0.00%		0.03%	0.16%	0.20%	-0.07%
CAD	-0.17%	-0.07%	-0.00%	-0.03%		0.10%	0.18%	-0.13%
AUD	-0.28%	-0.22%	-0.14%	-0.16%	-0.10%		0.06%	-0.25%
NZD	-0.33%	-0.25%	-0.19%	-0.20%	-0.18%	-0.06%		-0.29%
CHF	-0.02%	0.02%	0.10%	0.07%	0.13%	0.25%	0.29%

The heatmap shows the percentage changes of major currencies against each other. The base currency is chosen from the left column, while the quoted currency is chosen from the top row. For example, if you choose the Japanese yen in the left column and move along the horizontal line to the US dollar, the percentage change shown in the box will be JPY (base)/USD (quote).

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 combat 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. Troubled times are likely to strengthen the value of the yen against other currencies considered riskier to invest in.

VaselineSeptember 27, 2024

0 4 minutes read