USD/JPY declines below 144.00 as Japanese Yen strengthens on hot Tokyo CPI data
- USD/JPY falls below 144.000 despite a decent recovery in the US Dollar.
- US Appeals court lifted ban on Trump’s tariffs temporarily.
- Hot Tokyo CPI data has strengthened the Japanese Yen.
The USD/JPY pair trades lower slightly below 144.00 during European trading hours on Friday. The asset weakens as the Japanese Yen (JPY) outperforms across the board after the Statistics Bureau of Japan reported a hotter-than-projected Tokyo Consumer Price Index (CPI) data for May.
Japanese Yen PRICE Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.34% | 0.09% | -0.16% | 0.03% | 0.33% | 0.06% | 0.17% | |
| EUR | -0.34% | -0.22% | -0.54% | -0.31% | 0.04% | 0.05% | -0.17% | |
| GBP | -0.09% | 0.22% | -0.29% | -0.07% | 0.27% | 0.10% | 0.07% | |
| JPY | 0.16% | 0.54% | 0.29% | 0.18% | 0.58% | 0.37% | 0.38% | |
| CAD | -0.03% | 0.31% | 0.07% | -0.18% | 0.39% | 0.15% | 0.14% | |
| AUD | -0.33% | -0.04% | -0.27% | -0.58% | -0.39% | 0.01% | -0.18% | |
| NZD | -0.06% | -0.05% | -0.10% | -0.37% | -0.15% | -0.01% | -0.21% | |
| CHF | -0.17% | 0.17% | -0.07% | -0.38% | -0.14% | 0.18% | 0.21% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Tokyo CPI excluding Fresh Food, a key inflation measure tracked closely by Bank of Japan (BoJ) officials, rose at a faster pace of 3.6%, compared to estimates of 3.5% and the prior reading to 3.4%.
Hot Tokyo inflation data paves the way for more interest rate hikes this year. The next policy meeting of the BoJ will be on June 17. While, the latest Reuters poll that took place in the May 7-13 period showed most economists expect the BoJ to hold rates steady through September.
Meanwhile, the pair is trading lower despite a decent recovery move in the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises to near 99.60.
The Greenback attracts bids after the United States (US) federal appeals court gave verdict against international trade court’s decision to strike down a majority of tariffs imposed by President Donald Trump permanently.
In today’s session, the US Personal Consumption Expenditure Price Index (PCE) will be the key trigger for the US Dollar, which will be published at 12:30 GMT.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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