The Japanese yen proved by far the weakest performing major in the first half of 2021, as it depreciated by 7% versus the US dollar. The Bank of Japan (BoJ) monetary policy will remain easy for a protracted period as the economy remains challenged, resulting in yen depreciation ahead, according to economists at CIBC.
Yen outlook challenged by economic underperformance and BoJ policy inertia
“Extended COVID-19 emergency restrictions, which have resulted in the economy slumping into an H1 recession. Moreover, the lack of activity has proved to extend long-term disinflationary influences. As a result, domestic monetary policy will remain easy for a protracted period beyond fiscal year 2023.”
“Still, after a disappointing H1, the outlook for H2 looks somewhat more encouraging. The latest quarterly survey business survey (Tankan) revealed large manufacturer optimism at levels not seen since the end of 2018, and showed a substantive increase in capital expenditure expectations. After anticipating a modest 3% increase in Q1, expenditures are now expected to increase by 9.6%.”
“Headwinds in the domestic economy suggest that the expected rebound in H2 could prove somewhat weaker than expected. While rising capex and the prospect of a cheap JPY boosting profits is encouraging, there is little to detract from the expectation of a protracted period of policy inertia, keeping USD/JPY well supported.”
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.
Follow us on Telegram
Stay updated of all the news
AUD/USD bears in the market, chipping away into key support
AUD/USD bulls look to the 38.2% Fibonacci of the prior bearish leg and then 0.6725 which guards a continuation higher. Bears are in the market and eye a move deeper into support.
EUR/USD bears flirt with golden Fibonacci ratio, focus on 1.0765-60
EUR/USD seesaws around 1.0830-20 as the key Fibonacci retracement level probes bears during early Friday, following the Euro pair’s U-turn from a seven-week high the previous day. The Euro marked the first daily loss in six on Thursday as it failed to cross the two-month-old horizontal resistance area surrounding 1.0930-35.
Gold prods key hurdle as yields and US Dollar stabilize
Gold price struggles to extend two-day rebound as ascending resistance line from August 2022 prods bulls. Fresh concerns about banking crisis, Federal Reserve moves allow United States Treasury bond yields, US Dollar to lick their wounds. US preliminary PMIs, Durable Goods Orders will be important for Gold traders to watch for fresh impulse.
Arbitrum airdrop flops, but ARB still makes it to a commendable all-time high. Here’s what happened
The token launch for Arbitrum was quite bumpy, to say the least after users could not claim their airdrop tokens for the first one hour post-launch. The turn of events was very disappointing, given that users had been waiting for a week for the highly-advertised ARB airdrop.
Is the banking crisis over, or is the worst yet to come?
When the Fed started signalling higher for longer last summer, everybody assumed that the first thing to break would be consumption, followed by big job losses. Few anticipated that the banking sector would get caught up in the crossfire of the Federal Reserve’s battle against high inflation.