Dollar falls 5-month low against Japanese Yen

Economies.com
2019-06-20 06:14AM UTC

US dollar fell during the Asian session to its lowest since January 4 against the Japanese yen following developments and economic data released by the Japanese economy, and on the threshold of key data release expected today by the US economy, the largest economy in the world, following the the Bank of Japan's monetary policymakers decisions.

 

As of 06:02 GMT, USDJPY dropped 0.43% to 107.63 from the opening level of 108.10 after the pair reached a five-month low of 107.55, while it they reached the highest level in the session at 108.14.

 

We followed the BOJ's decision to hold interest rates at negative 0.10%, which was expected in the markets, coinciding with the release of the monetary policy statement in which BOJ monetary policymakers expressed growing concern over external risks that threaten to hinder economic recovery. Amid signs of weak exports from the third largest economy in the world, in addition to the recent decline in the industrial sector.

 

This came ahead of a press conference held by Governor of the Bank of Japan Haruhiko Kuroda, in which he stressed the need to proceed with an expansionary monetary policy in light of the high uncertainty about the global economic outlook, before the release of the overall Industrial activity index, which showed a 0.9% gain versus a 0.3% drop in March, which is above expectations of a 0.2% rise.

 

On the other hand, Investors are currently looking for the US economy to release its current account index reading, which could reflect a contraction of the deficit to $125 billion versus $134 billion in the fourth quarter, coinciding with the release of the Philadelphia Industrial Index for May, which might reflect a contraction of the widening to 10.6 versus 16.6 last May.

 

This comes in conjunction with the reading of the unemployment claims for the week ending on 15th June, which may reflect a decline By 2 thousand requests to 220 thousand compared to 222 thousand applications in the previous weekly reading, While the continued claims for the week ending in 8th of June, may show a decline of 15K to 1,680K versus 1,695K.

 

To the release of the CB Leading Index, which may show a contraction of 0.1% vs. 0.2% in last April, after the FOMC meeting of 18-19 June, which kept Interest rates between 2.25% and 2.50% with disclosure of the Federal Commission's expectations of growth rates, inflation and unemployment as well as future interest rates for the next three years.

 

We would like to point out that the Federal Reserve yesterday dropped the word "patient" from its statement, adding that they will act as necessary to maintain the economy, which reflects the possibility of a cut in federal interest rates later. In particular, the Federal Reserve's interest rate forecasts showed that eight Members see a reduction this year, while the average forecast did not reflect any reduction this year, but next year 2020.

 

Fed Governor Jerome Powell said at a press conference after the meeting in Washington that some monetary policy makers in the Fed committee believe that the issue of soft monetary policy has been boosted, stressing that the committee will continue to monitor the developments and economic data closely during the coming period to determine the future Monetary policy depending on those factors.

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