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by USD/JPY—The Japanese yen has weakened beyond 157 per dollar, reaching one-week lows due to a surge in the U.S. dollar. This rise in the dollar follows robust U.S. jobs data, which reduced the likelihood of two interest rate cuts by the Federal Reserve this year.
As a result, investors are becoming cautious ahead of the Federal Reserve’s policy decision, and a key U.S. inflation report is expected this week.
USDJPY Fundamental Analysis – 11-June-2024
Japan’s Economy Contracts 1.8% in Q1
In Japan, revised data indicates that the economy contracted at an annualized rate of 1.8% in the first quarter. This is a slight improvement from the preliminary report, which showed a 2% contraction, and it also beat analysts’ expectations of a 1.9% contraction.
Additionally, Japan’s current account surplus for April surpassed forecasts, providing positive news for the economy.
BOJ Bond Purchase Cuts in Spotlight
Investors are now eagerly awaiting the Bank of Japan’s (BOJ) policy decision on Friday. The central focus will be whether the BOJ will reduce its monthly bond purchases. Last week, BOJ Governor Kazuo Ueda confirmed that the central bank plans to gradually reduce its enormous balance sheet, though the exact timing is still uncertain.
This economic data highlights the interplay between domestic and international factors affecting currency values and monetary policy. Investors need to stay informed about these developments to make sound financial decisions.
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