Japanese Yen Soft Despite US Tariffs, BoJ Outlook

The Japanese yen was soft today as the market sentiment was stable despite the United States implementing additional tariffs on Chinese imports. News from Japan itself was good for the most part.
The Bank of Japan released today the Summary of Opinions at its April monetary policy meeting. The central bank signaled that it is planning to preserve its current extra loose monetary policy in the near future:

It is necessary to maintain the current monetary easing policy for an extended period of time, paying closer attention than before to the side effects on financial institutions and market functioning while examining developments in the global economy and the effects of the scheduled consumption tax hike. In addition, it is important that a policy mix of monetary and fiscal policies continue to be sustained through fiscal 2021.

But the BoJ also mentioned that further interest rate cuts may cause more harm than good, suggesting that the bank does not plan easing its monetary policy further:

There is a possibility that a further decline in interest rates will result in a greater risk of inducing side effects on the real economy, rather than positive effects, considering that there likely is a zero lower bound — contractually and operationally — on financial institutions’ interest rates on deposits and loans and the investment and funding structures of the private sector.

Japan’s Statistics Bureau reported that household spending rose 2.1% in March over the year versus the expected increase of 1.6%. Average cash earnings disappointed investors, falling 1.9% in March from a year ago, much more than analysts had predicted — 0.5%.
USD/JPY was up from 109.76 to 110.05 intraday, though backed off to 109.82 by 10:02 GMT today. EUR/JPY gained from 123.05 to 123.35, while its daily high was at 123.61. GBP/JPY ticked up from 142.72 to 142.90.

If you have any questions, comments, or opinions regarding the Japanese Yen, feel free to post them using the commentary form below.

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