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On June 25th, Bank of Japan (BOJ) policy board member Naoki Tamura stated on Thursday that pushing the BOJs policy rate towards a neutral level is crucial to avoid being forced to raise interest rates significantly later, and he suggested setting the neutral rate at around 2%. He prefers raising rates every few months to gradually approach the 2% neutral level. He also stated that if the likelihood of upside risks to prices increases, the BOJ should not hesitate to accelerate the pace of rate hikes or significantly raise interest rates. Tamura believes that the underlying inflation rate has reached 2%, and upside risks to prices remain regardless of developments in the Middle East. Furthermore, Japans situation differs fundamentally from that of the Federal Reserve and the European Central Bank because the BOJs policy rate remains below the neutral level, and inflation expectations are not yet fully anchored. Tamura stated that he opposes the BOJ pausing its bond-buying tapering from the next fiscal year, believing that the central bank should quickly normalize its bond holdings.On Thursday, June 25, the Hang Seng Index opened down 23.68 points, or 0.1%, at 23,388.5 points; the Hang Seng Tech Index opened up 18.25 points, or 0.41%, at 4,497.27 points; the H-share Index opened down 7.48 points, or 0.1%, at 7,757.49 points; and the Red Chip Index opened down 17.96 points, or 0.47%, at 3,840.2 points.Hong Kong stocks opened lower, with the Hang Seng Index down 0.1% and the Tech Index up 0.41%. Zhipu (02513.HK) rose nearly 7%, Sunny Optical Technology (02382.HK) rose over 5%, and MINIMAX-W (00100.HK) rose over 4%.The Peoples Bank of China (PBOC) announced today that it conducted 370.5 billion yuan of 7-day reverse repurchase operations, with both the bid and winning bids amounting to 370.5 billion yuan. The operating rate was 1.40%, unchanged from the previous rate.Bank of Japan board member Naoki Tamura: Controlling inflation will help prevent future demand declines and economic recession.

The USD/JPY Currency Pair Swings in a 60-Pip Range as Bulls Reclaim 124.00 on a Positive Note

Drake Hampton

Apr 08, 2022 10:07

Tips

  • The USD/JPY is up 1.26 percent this week.

  • The greenback strengthens as investors shrug off geopolitical concerns.

  • Forecast for the USD/JPY Exchange Rate: As bulls, we are leaning upward and are aiming for the YTD high of 125.10.

 

As the Asian Pacific session opens, USD/JPY pair extends its weekly gains on broad US dollar strength. The USD/JPY remains strong at 124.15, after trading in a tight 55-pip range over the last three days as the Eastern Europe conflict between Russia and Ukraine enters its sixth day.

 

Asian market futures continue to trade higher, despite the ongoing Russia-Ukraine confrontation. Contrary to the positive tone of Asian market futures, which point to a stronger open, US equities concluded the afternoon in a divided mood. Investors shrugged aside Russia-Ukraine tensions on Thursday, despite Russian Foreign Minister Sergei Lavrov's complaint that Ukraine's new draft accord submitted to Russia does not meet Russia's demands on Crimea and Donbas. Meanwhile, recent reports indicate that Russia is regrouping soldiers in preparation for another offensive aimed at reclaiming Ukraine's eastern territories, Donetsk and Luhansk.

 

The North American session on Thursday featured Fed speakers, lead by St. Louis Fed President James Bullard, who stated that the Fed is still behind the curve in its efforts to contain inflation. Bullard said that by the second half of the year, he would like to see the Federal Funds Rate (FFR) at 3.5 percent.

 

Later that day, Chicago Fed President Charles Evans indicated that "we (the Fed) will reach neutral by the end of this year or early next."

 

On the Japanese docket, the Current Account for February and Consumer Confidence for March would be the headline economic data releases. On the US front, Wholesale Inventories for February will be released on a monthly basis. 

USD/JPY Forecast: Technical Analysis

The USD/JPY continues bullish, but the average daily range (ADR) has been 55 pips during the last three days. Daily moving averages (DMAs) below the spot price further reinforce the uptrend, and it's worth noting that the 100-DMA at 109.48 is on the verge of crossing over the 200-DMA at 109.60.

 

With that considered, the first resistance level for the USD/JPY would be 124.00. If the latter is breached, the March 29 daily high of 124.30 will be revealed, followed by the year-to-date high of 125.10.


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