News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • Long wick candles are recurrent within the forex market. This makes understanding the meaning behind these candles invaluable to any trader to comprehend the market dynamics during a specific period. Learn about the importance of extended wicks here: https://t.co/SIpslvhX0J https://t.co/jVxcE1QUBs
  • Safe haven stocks also allow traders to diversify their portfolio and reduce risk. Learn if safe-haven stocks are made for you here: https://t.co/MTc4tUDD6c https://t.co/DOQ6tyzep9
  • Knowing how to accurately value a stock enables traders to identify and take advantage of opportunities in the stock market. Find out the difference between a stock's market and intrinsic value, and the importance of the two here: https://t.co/QszmdZFxlk https://t.co/WQLZ1X7gIY
  • but the next major point in my view to monitor will be 52.76 - at least in the short term.
  • #Brent having broken above the pre-OPEC drop off at 45.51 is a huge deal considering it failed to crack resistance there in August (leading to the invalidation of "uptrend 2") and the psychological significance of that level https://t.co/LkEyRxFhnq
  • The New Zealand Dollar looks poised to extend its push higher against its haven-associated counterparts on robust economic data and a less dovish stance from the RBNZ. Get your $NZD market update from @DanielGMoss here:https://t.co/vytr4OR1Jy https://t.co/ZcxEUWIm8O
  • It seems the markets are riding high, but risk is always lurking around the corner. Consider your escape plan before you find yourself in collapsing market. What are the top havens for different conditions in 2020? Find out from @JohnKicklighter here: https://t.co/1oeXWEsJkb https://t.co/x8uyOHLtgE
  • The Swiss Franc may continue higher against the US Dollar as technical pressure favors USD/CHF bears..Get your $USDCHF market update from @FxWestwater here:https://t.co/yqJbbhAWiu https://t.co/CaMR0Vqd1m
  • The US Dollar lost ground to most ASEAN currencies as Emerging Market assets climbed despite US economic woes. USD/INR is eyeing third-quarter Indian GDP at the end of the week. Get your market update from @ddubrovskyFX here:https://t.co/urDN2b5Nwd https://t.co/toSDbVZCSi
  • The global stock market can be categorized into specific groups or ‘stock market sectors’. Organizing the vast number of stocks in this way helps traders to view assets in a more manageable way. Get your stock market sectors basics here: https://t.co/5gbiHmY8yl https://t.co/mQ6ty8Yalv
Yen Strength Amid Market Tumult to Keep BOJ Target Out of Reach

Yen Strength Amid Market Tumult to Keep BOJ Target Out of Reach

2019-09-02 23:00:00
David Cottle, Analyst
Share:

Japanese Yen, BoJ Inflation Target, Talking Points:

  • The Yen has risen as a counter-cyclical haven play
  • Nothing unusual about that, but it has done so when inflation in Japan was already decelerating
  • The Bank of Japan’s official target looks less and less plausible

Find out what retail foreign exchange traders make of the Japanese Yen’s chances right now at the DailyFX Sentiment Page

The Japanese Yen has played its customary haven role as the financial world frets US-China trade war and bond-market soothsayers seeglobal recession in the yield curve.

Could Yen strengthnow be a headache too far for the Bank of Japan?

The currency has been the closest thing to a fixed point markets get in a shifting and volatile post-crisis landscape. That’s because it is perhaps uniquely immune to economic developments in its home country for one very clear reason; they have no bearing at all on monetary policy.

A strong manufacturing or consumer confidence number in their respective countries, say, may well lift the US Dollar, or the British Pound, as markets place bets that interest rates are more likely to rise as a result.

Not so in Japan. The Bank of Japan has been resolute in its policy stance: no change to extraordinary monetary accommodation until consumer price inflation sustainably hits 2%. Inflation is therefore the only variable which counts.

Japanese Inflation Just Won’t Play

The trouble is that, for its part, consumer price inflation has been utterly disinclined to respond.

It’s been below 2% now since 2015, and in ten years has only topped it for a brief period in that year and the one before. It’s latest showing, for July, was 0.4%. That’s an annualized rate. Prices have been decelerating for four months.

All the while the BoJ has deployed the full armament of stimulus: negative interest rates, control of bond yields and asset purchases to the point where its balance sheet tops Japan’s entire Gross Domestic Product.

In 2018 BoJ Governor Haruhiko Kuroda said there was a ‘high chance’ that inflation could hit the target this year.

In fact there’s no chance.

Officially of course all is well. That 2% inflation target stays and the BoJ insists that is has the tools to hit it.

The reality looks rather different. The target is getting further away, with reports occasionally filtering out of increasing disquiet in banking and academic at the side effects of even trying to hit it.

The US Dollar now looks set to break below an uptrend which has been clear on its monthly chart since May 2016. A sustained bout of Yen strength would see Japanese inflation head even lower, that inflation target look ever-more out of reach.

US Dollar Vs Japanese Yen, Monthly Chart

The Japanese Ministry of Finance said this week that it was watching Yen moves ‘with urgency.’

You bet it is.

Japanese Yen Resources For Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES