|

Yen slides as IMF cuts Japan’s growth estimate

The Japanese yen has posted sharp losses on Wednesday. In the European session, USD/JPY is trading at 152.67, up 1.06% at the time of writing. The yen is down 2.1% this week and has plunged 6.3% in October.

IMF slashes Japan’s growth forecast

The International Monetary Fund slashed its 2024 growth forecast for Japan to just 0.3%, down sharply from the 0.7% forecast in June. This is the lowest estimate since 2020, during the Covid-19 pandemic which severely impacted the economy. The IMF highlighted the “fading of a one-off boost” in tourism and disruptions in auto supply chains. Japan’s economy grew 1.7% in 2023, aided by a strong increase in tourism.

The IMF said it expects the economy to rebound in 2025 and expand 1.1% as private consumption and wage growth improve, assuming that the Bank of Japan continues to raise rates “toward a neutral setting of about 1.5%.”

The BoJ raised interest rates out of negative territory in July to the current rate of 0.25%. The markets are expecting further hikes but the central bank has been very cautious and wants to see evidence of sustainable inflation at 2% before making additional hikes. This has made the BoJ an outlier among major central banks, most of which are in a rate-cutting cycle in response to falling inflation. Japan releases Tokyo Core CPI, a key inflation indicator, on Thursday. The indicator is expected to ease to 1.7% in September, down from 2% in August.

The BoJ meets on Oct. 30-31, right after a general election on Oct. 27. The Bank will likely maintain policy settings but the markets will be keeping a close eye on the quarterly projections for inflation and growth.

USD/JPY Technical

  • USD/JPY has pushed above several resistance lines today and the next resistance line is 153.19.

  • 150.93 and 150.66 are providing support.

Chart

Author

Kenny Fisher

Kenny Fisher

MarketPulse

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities.

More from Kenny Fisher
Share:

Editor's Picks

EUR/USD holds near 1.1900 ahead of US data

EUR/USD struggles to build on Monday's gains and fluctuates near 1.1900 on Tuesday. Markets turn cautious, lifting the haven demand for the US Dollar ahead of the release of key US economic data, including Retail Sales and ADP Employment Change 4-week average.

GBP/USD declines toward 1.3650 on renewed USD strength

GBP/USD stays on the back foot and declines to the 1.3650 region on Tuesday. The negative shift seen in risk mood helps the US Dollar (USD) gather strength and makes it difficult for the pair to find a foothold. The immediate focus is now on the US Retail Sales data. 

Gold stabilizes above $5,000 ahead of US data

Gold enters a consolidation phase after posting strong gains on Monday but stays above the $5,000 psychological mark and the daily swing low. US Treasury bond yields continue to edge lower on news of Chinese regulators advising financial institutions to curb holdings of US Treasuries, helping XAU/USD hold its its ground.

Bitcoin Cash trades lower, risks dead-cat bounce amid bearish signals

Bitcoin Cash trades in the red below $522 at the time of writing on Tuesday, after multiple rejections at key resistance. BCH’s derivatives and on-chain indicators point to growing bearish sentiment and raise the risk of a dead-cat bounce toward lower support levels.

Dollar drops and stocks rally: The week of reckoning for US economic data

Following a sizeable move lower in US technology Stocks last week, we have witnessed a meaningful recovery unfold. The USD Index is in a concerning position; the monthly price continues to hold the south channel support.

Bitcoin Cash trades lower, risks dead-cat bounce amid bearish signals

Bitcoin Cash (BCH) trades in the red below $522 at the time of writing on Tuesday, after multiple rejections at key resistance. BCH’s derivatives and on-chain indicators point to growing bearish sentiment and raise the risk of a dead-cat bounce toward lower support levels.