Japanese Yen (JPY) Exchange Rate Remains Flat after Disappointing Data, Continuing Thai Conflict
The Japanese Yen has strengthened against the US Dollar this week and is currently resting around 102.00 after the Federal Reserve announced the US would not see interest rates rising in the foreseeable future as the economy still needs help.
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The Fed also announced they were set to slash $10bn per month off their stimulus package, and the gradual tapering generally inspires a modest weakening in the US Dollar in the short term, though it will strengthen it in the long term.
Economists have suggested that the Japanese Cabinet could be likely to attempt to boost the economy with growth strategies—such as a cut in corporate taxes—after observations of the economy expanding reasonably.
This week has seen disappointing data for Japanese exports as global economic expansion has slowed.
Friday has resulted in a dip against the ‘Buck’ at 102.05 as well as a softening against the Pound at 174.08, plunging to the lowest figure this year.
Strategist Kengo Suzuki for Mizuho Securities has discussed the US Dollar-Yen pairing and suggested: ‘Expectations were high for (the FOMC) to serve as a driving force,’ in relation to the tight range the pairing have been stuck within since the earlier part of this year.
This week saw Japan’s meeting minutes released, causing a flat response from the Yen.
Japanese exports face a potentially difficult time as they are affected by the ongoing Thai crisis. If a domino effect occurs, it will have a knock on effect for Japanese businesses and could pull down the Japanese economy.
Japan’s trade deficit also surprised economists after it came in at Y909 billion, much narrower than the Y1.173 trillion they had forecast.
Global instability due to the Iraq conflict has seen little interruption to the Yen, however eagerly anticipated is the speech by Bank of Japan Governor Haruhiko Kuroda, who is speaking at the yearly Shinkin bank meeting on Monday.
Monday will also see Japanese Manufacturing and Supermarket sales data published.
The Yen could be boosted if the results of the Kuroda statement and statistical data prove favourable for Japanese economy.
Thursday will publish Foreign Bond Investment and Stock Investment figures and Friday will be a highly influential day for the Yen.
Japan’s inflation, unemployment and retail sales statistics will all be published on Friday.
The unemployment rate is currently forecast to stagnate at the previous 3.6%, whilst retail sales are set to increase from -4.4% to 4.37%.
The previously published national consumer price indexes for May were 3.4% YoY in line with predictions; however the national consumer price index excluding fresh food beat expectations by 0.1% rising from the previous 1.3-3.2%.
Year on year saw Japanese spending decreasing from the previous 7.2% to -4.6% and the unemployment rate also remained stagnant.