The greenback’s decline has proved to be short-lived.
USDJPY – Daily Chart
USDJPY slipped from 151.90 and fell to 142. From there, a sharp reversal happened, and the pair is now moving higher with new levels in sight.
The latest drop in the Japanese yen will bring back talk of central bank intervention. On Wednesday, Japan’s top currency diplomat, Masato Kanda, told reports that the country would take appropriate action in the forex market if necessary.
“Recent currency moves are rapid. The yen has weakened by nearly 10 yen over the period of one month or so, such a rapid move is not good for the economy,” said Kanda, the vice finance minister for international affairs.
“We are closely watching currency markets with a strong sense of urgency and will act appropriately as needed.”
When asked whether those steps could include intervening in the market to stem the yen’s weakness, Kanda said authorities would take the most appropriate action.
“We are always watching the market 24 hours a day, 365 days a year to prepare for anything that may happen.”
The Japanese economy will see the release of GDP growth numbers at 7:50 HKT on the 15th. US retail sales figures will come later that day.
The US dollar has been surging on rate hopes, but the latest figures have been a concern. “The ‘last mile’ – as expected – is proving to be stickier and more stubborn, inhibiting even the most dovish wing of the FOMC,” said Quincy Krosby, global strategist at LPL Financial.
“Tuesday’s stronger-than-expected CPI print may cause the Fed to delay its rate cuts past May and June, which is when the market expects the Fed to begin cutting. Getting to the Fed’s magical 2% inflation target may prove more difficult than expected and result in elevated interest rates for a longer period of time,” said Skyler Weinand, CIO of Regan Capital.
USDJPY seems to be pushing for 152, bringing talk of intervention back to the market. US stocks were surging on slower inflation, but the wheels came off with data this week.
Official data show that price growth dropped to an annual rate of 3.1% in the first month of the year, higher than economists’ expectations of 2.9%.
