- USD/JPY jumps to 148.80 on hopes that the BoJ will maintain its ultra-loose monetary policy stance on Tuesday.
- The BoJ lacks a significant wage-price spiral to back an exit to negative interest rates.
- Diminished Fed rate cut expectations keep the US Dollar strong near its three-week highs around 103.50.
The USD/JPY climbs to 148.80 in the late European session on Friday as the Japanese Yen weakens on expectations that the Bank of Japan (BoJ) will not end the expansionary policy stance in the meeting on Tuesday.
Plenty of fundamentals favor the BoJ quitting negative interest rates. BoJ’s favourite inflation measure, the Consumer Price Index (CPI), excl. fresh food has remained above the 2% target for a longer period. Meanwhile, Japan's biggest companies agreed with labor unions to raise wages by the highest level in 33 years, reported Reuters.
In addition, Japan's Finance Minister Shunichi Suzuki said early Friday that the economy is no longer in deflation and that the government will mobilize all policy steps available to continue the strong trend of wage hikes this year. However, investors hope the BoJ will not go for exiting the prolonged expansionary policy stance as a full-proof plan for the wage-price spiral remains absent.
Market participants will keenly focus on the BoJ’s press conference about when the central bank will scrap its negative interest rates and Yield Curve Control (YCC). Earlier, BoJ Governor Kazuo Ueda said policymakers will debate whether the outlook is bright enough to phase out the massive monetary stimulus.
Meanwhile, market sentiment remains cautious as stubborn United States inflation has dented expectations for the Federal Reserve (Fed) to reduce interest rates from the June meeting. Surprisingly stubborn US Producer Price Index (PPI) data for February is expected to allow Fed policymakers to argue to keep interest rates higher for a longer period.
The US Dollar Index (DXY) is holding near its three-week high of around 103.50. Ten-year US Treasury yields are extending their upside to 4.31%.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays weak near 1.0700 after German GDP data
EUR/USD is keeping the red near 1.0700 as investors await inflation and growth data for the Eurozone. The data from Germany showed that the GDP contracted at an annual rate of 0.2% in Q1 as expected, not allowing the Euro to attract investors.
GBP/USD remains pressured toward 1.2500 on US Dollar rebound
GBP/USD is extending losses toward 1.2500 in European trading on Tuesday. A cautious risk tone and a decent US Dollar comeback weigh negatively on the pair. The focus now shifts to mid-tier US data amid a data-light UK docket.
Gold price remains depressed near $2,320 amid stronger USD, ahead of US macro data
Gold price (XAU/USD) remains depressed heading into the European session on Tuesday and is currently placed near the lower end of its daily range, just above the $2,320 level.
BNB price risks a 10% drop as Binance founder and ex-CEO Changpeng Zhao eyes Tuesday sentencing
Binance Coin price is dumping, with the one-day chart showing a defined downtrend. While the broader market continues to bleed, things could get worse for BNB price ahead of Binance executive Changpeng Zhao sentencing on Tuesday, April 30.
Data fuels China optimism
China's factory activity has expanded for a second consecutive month, marking the best streak in over a year and fueling optimism for the sustainability of the world's second-largest economy's recovery.