Yen Finds Stronger Footing After Bank Of Japan Concludes Its Meeting On Thursday

Yen Finds Stronger Footing After Bank Of Japan Concludes Its Meeting - Tokyo Tower, Tokyo Japan
Bill Cascade   NEW 20/09/2019 00:00:00 Finance

The end of this Bank of Japan’s meeting on Thursday had a positive impact on the Japanese Yen’s performance judging by its rally against the US dollar.

The BOJ announced through the meeting that it decided to maintain the -0.1% rate target for the short-term. The Japanese central bank did, however, point out in a statement that it is vital to keep in mind that there is a likelihood of losing the price target momentum. BOJ also noted that it would analyze price and economic developments during the next meeting.

Almost half of the analysts observing the Japanese Yen and the country’s economy speculated that the BOJ would implement easing measures. This is especially in light of the mounting external risks, especially with the slowed global economic conditions. The markets still believe that the BOJ will make changes to Japan’s monetary policy and perhaps even roll out additional stimulus policies in the future.

Meanwhile, Thursday's BOJ meeting seemingly favored the Yen's performance, especially against the US dollar. The Yen’s rally led to a 0.6% decline in the USD/JPY currency exchange rate to the 107.79 level at 03:52 GMT. The Yen’ strength against the US dollar was backed by the dollar’s weaker performance following the Federal Reserve’s decision to lower interest rates from 2-2.25% to 1.75-2%.

USD/JPY Forex Chart

 Source

The USD/JPY exchange rate performance on Wednesday indicates that the US dollar had the edge over the Yen. This is especially towards the end of the day as the price turned bullish, reaching the day’s high on Wednesday at 108.4800 before ending the session slightly lower at 108.4410.

The USD/JPY currency pair kicked off Thursday’s trading session on bearish momentum. This saw the price drop from the day’s high at 108.4750 to the day’s low at 107.7840 within a few hours. The currency pair exchange rate traded at 107.9990 at the time of this press. This means that there have been slight corrections as dollar attempts to recover some of the lost ground against Yen.

Yen's gain against the dollar is mainly influenced the currency's safe-haven status; rather than a strong backing by the BOJ, especially with the interest rate target. The USD/JPY currency pair is heavily affected by risk appetite

The Federal Reserve’s decision to slash rate also encouraged traders to respond in favor of the Yen. This is perhaps so that they can be on the safe side by avoiding potential volatility caused by the interest rate changes. Traders tend to switch to the Yen when the market is characterized by higher risk.

The US dollar index also experienced a slight decline by 0.1% after the Fed slashed its interest rates despite it being a move that analysts anticipated.

The BOJ decided to maintain the prevailing rate despite the weak inflation and also the declining exports over the past few months. Japan has been locked in a trade war with South Korea, but that has been dwarfed by the Sino-China trade war. Sales tax hikes are also expected to cause slow domestic demand in October.

 

More articles

US Dollar Under Pressure On Weak Economic Data

Bill Cascade   NEW 09/10/2019 00:00:00 Forex

The US dollar is struggling for direction, having lost momentum on weak employment data. The greenback has registered impressive gains, in recent months, as other majors currencies continued to edge lower...

Buy to Open Definition, Explained in Detail with Example

Bill Cascade   NEW 08/10/2019 00:00:00 Guides

There are four types of options that are commonly used in the industry. Alongside buy to open, these include buy to close, sell to open and sell to close. Here we look at precisely what the basic definition of buy to open means, alongside offering an example of it at work. By analyzing the term further, we can provide a better understanding...

Swiss Franc Eyes Fresh Gains On Safe Haven Appeal

Bill Cascade   NEW 07/10/2019 00:00:00 Forex

The Swiss franc has lost some ground against other major currencies in recent trading sessions. For starters, it is trading at two-week lows against the Euro, which has tumbled to two-year lows in recent months. While the weakness of the Swiss franc stems from weak economic data, a bounce-back could be in the offing going forward...

Turkish Lira On The Recovery As Swedish Krona Woes Persist

Bill Cascade   NEW 06/10/2019 00:00:00 Forex

Turkey's government remains optimistic about the Lira appreciation, against the dollar, over the next three years. Economic forecasts by the finance ministry indicate the government expects the country’s economy to expand by 5% next year...

Argentines Turn To the Polls To Avert Economic Crisis And Peso Volatility

Bill Cascade   NEW 03/10/2019 00:00:00 Finance

The country is struggling with one of the highest levels of inflation at 54%. High inflation levels have affected the way of life, as prices of goods continue to rise, and small businesses struggle to remain afloat... 

Free margin - Credit