Japanese Yen Touches Highest Since November 2016 vs. US Dollar

The Japanese yen rallied against its most-traded rivals today, touching the highest level since November 2016 versus the US dollar, thanks to the outlook for monetary policy normalization, positive macroeconomic data, and the general risk averse sentiment on the Forex market.

Bank of Japan Governor Haruhiko Kuroda surprised markets, discussing hist stimulus exit strategy for the first time today. He said:

The BOJ’s board members expect that prices will reach 2 percent around fiscal 2019. If this happens, there’s no doubt that we will consider and debate an exit.

The BoJ felt the pressure for some time now to shift its monetary policy stance as central banks of other developed nations were either tightening monetary policy or at least were considering doing so. Yet Kuroda was steadily refusing to talk about an end to stimulus, so it was refreshing to hear the change of tone now.

The Tokyo core Consumer Price Index rose 0.9% in February from a year ago, accelerating from the 0.7% growth registered in the previous month and exceeding the consensus forecast of 0.8%. The unemployment rate fell from 2.7% to 2.4% unexpectedly. The monetary base increased by 9.4% in February from the same period of the previous year, compared to the forecast increase of 9.2% and the previous month’s gain of 9.7%.

All those factors were helping the Japanese currency as well as prospects for trade wars after the United States decided to implement tariffs on steel and aluminum imports.

USD/JPY slumped from 106.22 to 105.32 as of 13:24 GMT today. EUR/JPY declined from 130.30 tot 129.71. GBP/JPY dropped from 146.28 to 145.17.

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