US Dollar to Japanese Yen Exchange Rate in Bullish Trend; GBP/JPY Struggles after UK Data
If you're looking to make an international money transfer, we recommend TorFX.
Yesterday it was revealed that the US economy rebounded by even more than economists had anticipated in the second quarter of the year.
Adverse winter weather had contributed to the world’s largest economy shrinking notably in the first three months of the year, but since then there have been repeated signs of improvement in areas like consumer spending, employment and housing.
Even Federal Reserve Chairwoman Janet Yellen, who is known for her dovish stance on fiscal policy, has recently intimated that borrowing costs could be hiked sooner than industry experts forecast.
Yesterday the confidence of investors was proved to be justified as data confirmed that the US economy rebounded from positively revised contraction of -2.1% in Q1 to growth of 4.0% in Q2.
US Personal Consumption also jumped by more than economists had expected.
To round of a data-heavy day for the US the Federal Open Market Committee delivered its interest rate decision.
As expected, the level of bond buying was trimmed by another 10 billion Dollars.
Although Yellen was slightly dovish in her accompanying policy statement, the fact that one member of the FOMC did vote in favour of a rate hike kept the US Dollar trending in a stronger position.
The USD/JPY exchange rate is currently in line to post nine consecutive days of gains as US fundamentals continue to impress and the odds of the Federal Reserve increasing interest rates in the near future climb.
In the opinion of foreign exchange strategist Alvin Tan; ‘The Dollar is at the beginning of an uptrend verses the Euro and Yen. The market is getting increasingly hawkish about US rates. Short-term forward expectations of Fed policy have been moving forward quite steadily.’
The US Dollar to Japanese Yen exchange rate was little changed as data showed that the pace of wage growth in Japan slowed last month. Labour Cash Earnings increased by 0.4%, half the 0.8% increase anticipated.
Other Japanese reports showed a -9.5% decrease in housing starts in June on a year-on-year basis and a 9.3% increase in domestic construction orders.
The Pound Sterling to Japanese Yen (GBP/JPY) exchange rate slid to a low of 173.5400 on Thursday in reaction to a disappointing UK Consumer Confidence report and the news that UK house prices climbed by less-than-forecast in July.
US Dollar to Japanese Yen Currency Forecast
Additional fluctuations on the USD/JPY pairing could occur as a result of today’s US Initial Jobless and Continuing Claims figures, as well as the Chicago Purchasing Manager report.
Friday will see the release of Japan’s Manufacturing PMI. Bank of Japan Governor Haruhiko Kuroda is also due to speech in Japan.
We forecast that the US Dollar to Japanese Yen exchange rate will continue trending in a stronger position until the release of the US Non-Farm Payrolls report. If the report shows that the US economy added over 200,000 positions in July the ‘Greenback’ could post further gains.
The US Dollar to Japanese Yen (USD/JPY) exchange rate is currently trading in the region of 102.8400 and the Pound Sterling to Japanese Yen (GBP/JPY) exchange rate is currently trading in the region of 173.6400