During the early hours of Asian trading on Friday, the USD/JPY pair continues to hold steady near 151.45, marking its second consecutive day of positive performance. The cautious stance of the Bank of Japan (BoJ) towards maintaining accommodative monetary policies is applying downward pressure on the Japanese Yen (JPY). Meanwhile, supportive comments from Federal Reserve (Fed) officials are bolstering the US Dollar (USD) and consequently, the USD/JPY pair.
Recent data from the Statistics Bureau of Japan reveals that the headline Tokyo Consumer Price Index (CPI) for March registered a 2.6% year-on-year (YoY) increase, matching the rise observed in February. However, the Tokyo CPI excluding Fresh Food and Energy rose by 2.9% YoY, slightly lower than the 3.1% uptick recorded in February. Despite these figures, the JPY remains subdued in the wake of dovish sentiments expressed by Japanese authorities.
Japanese Prime Minister Fumio Kishida articulated his support for the BoJ’s decision to maintain accommodative monetary conditions, emphasizing the government’s commitment to collaborating with the central bank to foster wage growth and steer the economy away from deflationary pressures.
However, potential intervention from Japanese authorities looms as a factor that could impede further depreciation of the JPY. Finance Minister Shunichi Suzuki hinted at possible measures to address disorderly foreign exchange movements, underscoring a vigilant approach towards currency fluctuations.
On the USD front, robust economic indicators and a sustained narrative of higher interest rates from the Fed are buoying the Greenback against its peers. Fed Governor Christopher Waller, known for his hawkish stance, reiterated on Thursday that the central bank is in no hurry to adjust its benchmark rate, emphasizing the need for continued progress in inflation metrics before considering rate cuts.
Looking ahead, market attention will turn to key data releases next week, including Japan’s Tankan Large Manufacturing Index for the first quarter and the US ISM Purchasing Managers Index (PMI) report. Additionally, all eyes will be on the US Nonfarm Payrolls (NFP) report for March, scheduled for release on April 5, as investors seek insights into the state of the labor market.
