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by USD/JPY—On Thursday, the Japanese yen experienced another decline, surpassing 158 per dollar. This development puts the currency at risk of falling to 34-year lows. Investors are particularly cautious as they await Japan’s May inflation data, which is set to be released on Friday. This data is critical as it could influence the Bank of Japan’s (BOJ) next policy decision.
USDJPY Fundamental Analysis – 20-June-2024
BOJ Signals Possible July Rate Hike
Adding to the anticipation, June manufacturing and services PMI figures are also on the horizon. Earlier this week, BOJ Governor Kazuo Ueda addressed the Japanese parliament, indicating the possibility of an interest rate hike in the July meeting. However, this decision hinges on the forthcoming economic data.
Weak Yen vs Rising Wages in Japan
Governor Ueda highlighted the dual challenges facing Japan’s economy. On one hand, the weak yen drives import costs, which could strain household budgets and reduce spending. On the other hand, rising wages could potentially boost consumer spending, offering a glimmer of hope for economic stability.
BOJ Keeps Rates Steady, Plans Bond Strategy
Last week, the BOJ maintained its current interest rates, a widely anticipated move. The central bank also announced its intention to outline a plan for scaling back its bond-buying program in the upcoming policy meeting in July.
This evolving economic landscape underscores the importance of staying informed about key economic indicators and central bank policies, as these factors significantly impact financial markets and everyday financial decisions.
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