Forex Today: Japanese Yen falls on BoJ inaction, focus shifts to US PCE inflation

Source Fxstreet
Apr 26, 2024 07:36

Here is what you need to know on Friday, April 26:

The Japanese Yen (JPY) stays under bearish pressure and trades at its weakest level in over three decades against the US Dollar following the Bank of Japan's (BoJ) decision to leave the monetary policy settings unchanged. Later in the day, the US Bureau of Economic Analysis will release the Personal Consumption Expenditures (PCE) Price Index data, the Federal Reserve's (Fed) preferred gauge of inflation, for March.

US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets.

The BoJ announced early Friday that board members decided to maintain the key interest rate target range steady at 0%-0.1%. The BoJ removed from its policy statement the reference to currently buying about 6 trillion JPY worth of Japanese Government Bonds per month and reiterated that they will adjust the degree of monetary easing if trend inflation were to rise further. In the post-meeting press conference, BoJ Governor Kazuo Ueda said the change of a prolonged JPY weakness was "not zero" and added that the impact of exchange rates on the economy include positive ones. At the time of press, USD/JPY was trading at since May 1990 above 156.50, rising more than 0.7% on the day.

Ueda Speech: BoJ Governor discusses interest rate outlook.

Japanese Yen remains heavily offered near multi-decade low after BoJ Governor Ueda's comments.

Japanese Yen price today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the Australian Dollar.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   0.01% 0.06% -0.08% -0.26% 0.73% -0.01% -0.02%
EUR 0.00%   0.04% -0.06% -0.26% 0.76% 0.00% -0.01%
GBP -0.05% -0.06%   -0.12% -0.33% 0.71% -0.08% -0.07%
CAD 0.08% 0.08% 0.12%   -0.21% 0.81% 0.05% 0.06%
AUD 0.26% 0.27% 0.33% 0.21%   1.03% 0.25% 0.26%
JPY -0.74% -0.76% -0.73% -0.81% -1.06%   -0.79% -0.79%
NZD 0.02% 0.04% 0.10% -0.03% -0.23% 0.78%   0.02%
CHF 0.03% 0.03% 0.09% -0.03% -0.26% 0.77% 0.03%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

 

The USD Index (DXY) closed in negative territory on Thursday after the data showed that the US economy expanded at a softer pace than expected in the first quarter. The details of the Gross Domestic Product report, however, showed a significant increase in the GDP price deflator and helped the DXY limit its losses. Early Friday, DXY fluctuates in a tight channel above 105.50 and the 10-year US Treasury bond yield stays near 4.7% after rising more than 1% on Thursday. Meanwhile, US stock index futures register strong gains in the European morning, reflecting an improvement in risk mood.

EUR/USD continued to push higher in the American session on Thursday and registered its highest daily close in over two weeks. The pair stays in a consolidation phase below 1.0750 in the European session.

GBP/USD extended its weekly rebound into a third consecutive day on Thursday and gained 0.4% on the day. The pair holds steady at around 1.2500 to start the last trading day of the week.

Gold edged higher on Thursday but struggled to gather bullish momentum as US yields stretched higher. XAU/USD keeps its footing early Friday and trades in the green above $2,340.

Economic Indicator

Core Personal Consumption Expenditures - Price Index (YoY)

The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures." Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.

Read more.

Last release: Fri Mar 29, 2024 12:30

Frequency: Monthly

Actual: 2.8%

Consensus: 2.8%

Previous: 2.8%

Source: US Bureau of Economic Analysis

After publishing the GDP report, the US Bureau of Economic Analysis releases the Personal Consumption Expenditures (PCE) Price Index data alongside the monthly changes in Personal Spending and Personal Income. FOMC policymakers use the annual Core PCE Price Index, which excludes volatile food and energy prices, as their primary gauge of inflation. A stronger-than-expected reading could help the USD outperform its rivals as it would hint at a possible hawkish shift in the Fed’s forward guidance and vice versa.

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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